Musk Sees Seattle-Made Satellites in Race to Mars

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SpaceX CEO Elon Musk
Elon Musk, chief executive officer of Space Exploration Technologies Corp., speaks at the unveiling of the Manned Dragon V2 Space Taxi in Hawthorne, California, U.S., on May 29, 2014. Photographer: Patrick T. Fallon/Bloomberg

The world according to Elon Musk is about to get more ambitious -- ranging from a Seattle engineering office to develop and launch satellites to the on-time delivery of electric sport-utility vehicles that appeal to women.

The 43-year-old billionaire also said in an interview he’s optimistic his Space Exploration Technologies Corp., the first commercial rocket maker to deliver cargo to the International Space Station, will settle a lawsuit with the U.S. Air Force over satellite launch contracts, and that construction of a Tesla “gigafactory” for electric-car batteries outside Reno, Nevada, is on schedule.

Satellites will play a crucial role in Musk’s efforts to reach his ultimate goal -- establishing a human settlement on Mars. Building a commercial satellite business will provide the entrepreneur with revenue and communications know-how that will eventually serve his Martian aspirations.

Musk co-founded the PayPal e-commerce website acquired by EBay Inc. In addition to being creator and chief executive officer of SpaceX and co-founder and CEO of Tesla Motors Inc., he is also chairman of SolarCity Corp., the biggest installer of rooftop solar panels in the U.S.

“We’re going to try and do for satellites what we’ve done for rockets,” Musk said from a conference room at SpaceX headquarters in Hawthorne, California, predicting the company’s Seattle engineering office will ultimately employ “several hundred people, maybe a thousand people.”

100,000 Cars

Musk’s other big endeavor, Tesla has changes in store as well. The Model X should debut in the third quarter as planned after earlier delays.

The vehicle will have advanced autonomous-driving features, and is drawing more than half its orders from women, a big change from the Model S, which gets two-thirds of its sales from men, he said.

“The X will have a step beyond what we’re currently shipping on the autonomous front,” Musk said. “There are a whole bunch of things about the X that have not been revealed.”

The South African, who became a U.S. citizen in 2002, will speak today at the Automotive News World Congress in Detroit, and said he’s confident Palo Alto, California-based Tesla will see demand for 100,000 cars a year, giving the company $10 billion in annual sales.

Tesla shares have appreciated more than 45 percent in the past year, outperforming the auto industry, with the company having the highest market capitalization per vehicle sold at about $776,000, according to data compiled by Bloomberg. The stock rose 1 percent to $204.25 at the close in New York.

In November, the company cut its full-year 2014 sales forecast to 33,000 cars from 35,000, saying it couldn’t produce the higher number.

Cheaper Gasoline

One concern is falling gasoline prices, which will complicate efforts to sell the more affordable Model 3 planned for 2017. That car may sell for as little as $35,000, roughly half the cheapest Model S, and affect the calculus for cost-conscious buyers, he said.

“It just means we have to work harder at improving the cost of electric vehicles,” Musk said.

Sales have declined in recent months in China, where consumers have misplaced concerns about home recharging, while Tesla has seen demand increase in the U.S. and Europe, he said.

“China is a small percentage of our sales right now,” Musk said, describing the market as “a wild card that seems to change for reasons we don’t understand.”

Rocket Landing

On Jan. 10, closely held SpaceX narrowly missed the first-ever bid to recapture a spent rocket, a key step toward reusing launch vehicles. Musk said today he’s more confident the next lift-off, set for Jan. 29, will hit the mark, with a soft vertical touchdown atop an unmanned recovery vessel about the size of a soccer pitch or a U.S. football field.

“If we had not run short of hydraulic fluid we would have actually landed,” Musk said. “So for the next flight we’ve got 50 percent more hydraulic fluid margins. We’ve got a real decent chance in about three weeks.”

Since winning a contract from the National Aeronautics and Space Administration in 2008, SpaceX has emerged as the lowest-cost launch provider in the commercial space industry and a competitor to aerospace titans Boeing Co. and Lockheed Martin Corp., NASA partners since the Apollo era.

“They’re getting the reputation for being a pretty gutsy company that’s willing to get things done,” Marco Caceres, director of space studies with Teal Group, a Fairfax, Virginia-based consultant, said in a Jan. 10 phone interview.

Satellite Lawsuit

Closely held SpaceX is eager to expand its business with the U.S. government beyond NASA missions and wants to vie for some of the $70 billion the Pentagon may spend on satellite launches through 2030.

The company sued the Air Force last spring, accusing the service of creating an illegal monopoly for satellite launches. The lawsuit was seen as unusually aggressive for a company seeking a government contract.

Musk said he’s “hopeful” a settlement can be reached. That would involve “taking a look at the missions that were awarded without any competition,” he said.

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