“We want a new Space Race,” said Elon Musk on 6th February 2018, following the successful launch of SpaceX’s Falcon Heavy rocket. “Races are exciting.”[1]

More than 60 years since the first Space Race inspired mankind to discover new, celestial frontiers, we are now witnessing the dawning of a second sprint to the stars. If the undeniable, imagination-tickling thrill of charting the wild blue yonder feels familiar, though, the cast of players has certainly changed. “In the days of the space race between America and the Soviet Union, the heavens were a front in the cold war between two competing ideologies. Since then, power has not merely shifted between countries. It has also shifted between governments and individuals.”[2]

"Power has not merely shifted between countries, it has also shifted between governments and individuals."

Welcome to the era of NewSpace, where private companies, and commercial interests—in lieu of governments—are pursuing visionary, inventive, and cost-effective space exploration technology.[3]

From one perspective, this is an exhilarating decoupling of technology from budget-hobbled political agencies; there is a whiff of democratisation in this opening up of the heavens. That said, to put it mildly, “billionaires matter in this game.”[4]

“Lifting satellites into orbit is a proper business, and therefore properly the business of businessfolk. The fact that a wealthy person is willing to spend his money on such a fanciful space project as going to Mars is, though, an intriguing departure—and a good measure of just how rich some people have become.”[5]

That is not to diminish the recent, spectacular launch of SpaceX’s Falcon Heavy rocket, which the company had previously estimated as having only a 50% chance of success.[6] Currently the most powerful rocket in use today—second only in force to the Saturn V rockets which NASA used to land men on the moon in the Apollo era[7]—the Falcon could, in Musk’s words, “launch things direct to Pluto and beyond, no stop needed.” It could also launch people to the moon, to Mars, and send giant satellites into orbit.[8]

In addition to the Falcon’s force, its launch was also significant as a demonstration of reusable, cost-effective space technology in action. “[T]he main attraction of Falcon Heavy was arguably its three 16-story reusable boosters, the force behind Musk’s call for renewed competition in space.” Two of those side boosters “detached from the rocket a few minutes after launch, fell back toward Earth with a sonic boom, and landed on the ground at Cape Canaveral for potential use in a future launch” as planned, while one instead landed off course in the Atlantic Ocean. Still, if not totally flawless, the event demonstrated the potential for change in “a launch market where throwing all rocket parts away after one launch is the norm.” [9]

Beyond its technological advancements, SpaceX’s vision for the future has helped it capture the popular imagination as well. In a talk at last year’s 68th International Astronautical Congress in Adelaide, Australia, Musk discussed “an audacious plan to place a million people on Mars in 40 to 100 years”, which “revolves around a large rocket, codenamed the BFR, which blasts a spaceship carrying up to 100 people into orbit before returning to the launch pad for an upright landing.”[10] The possibility of colonising the Red Planet—even in our lifetimes—is a breathtaking idea.

"India’s robust space program, for instance, was “the first Asian space agency to send an orbiter to Mars.""

If Musk’s SpaceX is uniquely visionary, it’s not without its well-funded competition. At the end of last year, Blue Origin—owned by Amazon founder and CEO Jeff Bezos—reached a new milestone when it “successfully launched and landed a rocket test with its new capsule.”[11] Blue Origin has thus far proffered fewer camera-ready pyrotechnics, but Bezos’s slow-and-steady approach, and vision for “a space-faring universe where people will live and work”[12], make it compelling competition.

And there are numerous others. Google co-founder Larry Page is behind space mining company Planetary Resources.[13] Meanwhile, Sir Richard Branson’s Virgin Galactic is now at work on SpaceShipTwo. The company was hobbled after a fatal crash during testing on its SpaceShipOne in 2014, but recently received £1 billion in funding from Saudi Arabia, and claims to be “just months away from sending people into space.”[14]

“Bezos and Musk are not only competing against each other but an emerging generation of aerospace entrepreneurs, as well as fellow swashbuckling billionaires Paul Allen, Yuri Milner, and Richard Branson, all of whom have private space initiatives.”[15] In this Space Race, the track is so full of competitors that they begin to resemble a mob.

Beyond the billionaires, however, NewSpace is also characterised by rising global powers. “The number of “spacefaring” countries has increased since the 1960s, when only America and the Soviet Union counted.”[16] Today, the balance is beginning to tip towards Asia’s growing powerhouses. “India and China are among a group of countries creeping up on the two superpowers, challenging their dominance not only in exploration but also in the commercial space sector and, critically, in the use of space for military purposes.”[17]

India’s robust space program, for instance, was “the first Asian space agency to send an orbiter to Mars,” and “it also nearly tripled a previous world record by launching 104 satellites into orbit in a single mission this past February.”[18] For its part, “China’s most ambitious near-term project is the launch of its own space station by 2022, which coincides with the beginning of the end of the International Space Station,” and which would amount to a colossal political shift amongst the stars.[19]

"Winning lucrative government contracts is no longer the primary objective for these manufacturers."

The potential for NewSpace, and the major players involved, remain both compelling and troubling. As The Guardian writes of Musk’s cherry-red Tesla, launched by the Falcon Heavy and piloted by a mannequin nicknamed ‘Starman’: “The photograph was beamed down to Earth courtesy of Elon Musk’s ego, bravado and taste for the absurd. It is human folly and genius rolled into one, a picture that sums up 2018 so far.”[20]

What’s new in this second Space Race, as Casey Dreier, Director of Space Policy at the Planetary Society, notes, is that winning lucrative government contracts is no longer the primary objective for these manufacturers. Instead, Dreier compared NewSpace to the “Gilded Age, when billionaires sought to single-handedly reshape the future, or at least the marketplace.”[21]

Will this billionaire class seek to advance the cause of all humanity, as they continue to boldly strive into the heavens? Or are the motivations behind NewSpace less noble, driven by the desire to scrawl one’s name on the largest canvas of all? At the dawning of this second Space Race, the full scope of its intentions remains to be seen, but one thing we can be certain of, is that the opportunities that lie ahead are immeasurable.

 

This story is designed to throw an everyday lens on some of the issues being discussed and debated by investors across the world; it is not research, so please do not interpret it as a recommendation for your personal investments. However, if something has piqued your interest and you would like to find out more or discuss what investments might be suitable for you, please contact one of our Investment Managers on 020 7337 0777.

 

[1] The Guardian

[2] The Economist

[3] Forbes

[4] Forbes

[5] The Economist

[6] BBC News

[7] The Guardian

[8] Business Insider

[9] Business Insider

[10] Planetary.org

[11] Fortune

[12] FastCompany

[13] TechCrunch

[14] The Guardian

[15] FastCompany

[16] The Economist

[17] Vice News

[18] National Geographic

[19] Vice News

[20] The Guardian

[21] The Guardian