The launch market likely faces a shortfall of capacity in the near-term, but also faces the risk of oversupply in the longer term, a new report from McKinsey finds.
The launch market is in flux, as a number of legacy vehicles near retirement and replacement heavy-lift vehicles face delays, and many new vehicles in development have yet to enter the market. A McKinsey report authored by Chris Daehnick, John Gang, and Ilan Rozenkopf, considered three scenarios for potential growth of the space sector by 2030, examining the interconnectedness of demand for launches and supply of launch capacity.
McKinsey estimated demand on the low end is about 18,000 satellites with an average mass of 540 kg will be deployed by 2030. In the “base level” scenario, 24,000 satellites with an average mass of 870 kg would be deployed by 2030. And the high-demand scenario assumes that 67,000 satellites with an average mass of 1 ton are deployed by 2030 — a scenario in which satellites are replaced frequently and there are many heavy-payload-mass flights to space stations and beyond.
“If the high-demand scenario plays out, demand would rise quickly and then gradually fall as constellations reach a steady state — assuming there are no more new entrants. The trajectory in the base-case scenario would be slightly different, with demand peaking by 2028 and then remaining steady. In the low-case scenario, demand would remain around current levels up to 2027 and then dip briefly, since fewer of the concepts deployed require continuous replenishment. Starlink’s evolution is a prominent factor in all scenarios,” the report says.
The impact of SpaceX’s Starship rocket is a major question in the report. SpaceX could potentially fly Starship daily by 2030, sending over 100 tons to orbit per launch, which would dramatically impact price in the industry. But McKinsey pointed out this development timeline is uncertain, and if Starship becomes operational, initial launches may be focused on Starlink. (SpaceX stood down from a planned Starship flight test on Monday.)
If Starship does not ramp up and Starlink V2 deployment is delayed, there would still be a short-term launch shortage for the “base-case” of demand. But if the low demand scenario plays out, McKinsey estimates that medium and heavy launch providers would have excess capacity in the near-term.
The report finds there is likely to be a short-term supply shortage as legacy vehicles are retired.
“As legacy vehicles ramp down and the industry transitions to next-generation platforms, a short-term supply shortage may open the window to a period of opportunity,” the report says. “Providers that can speedily ramp up their operational capabilities have a chance to capture market share, assuming vehicle reliability and the ability to control costs.”
But in the long term, there is a risk of oversupply. “In the longer term, as providers increase launch rates and vehicles become more reliable, there is a risk of oversupply, at which point cost control is likely to become a vital factor in remaining competitive.”
This article was first published by Defense Daily sister publication Via Satellite.