It's been barely a month since rocket-ship start-up Relativity Space made history, launching the world's first (nearly) 100% 3-D-printed rocket (almost) all the way into orbit.
While technically a failure (because it didn't achieve its intended orbit), Relativity's March 22, 2023 Terran 1 launch was close enough to a success that the company is taking its next step into space. Without passing "Go," and without collecting $200 (or executing its contracts to launch six Iridium satellites on Terran 1 launch vehicles), Relativity is ditching the Terran 1 design and proceeding to develop an entirely new, even bigger rocket: The Terran R.
And it's going to look a lot like SpaceX's Falcon 9.
Image source: Getty Images.
Introducing Terran R
Had Relativity proceeded with the development of Terran 1, it might have quickly dominated the market for "small" rockets. Within that class of rocket, Terran 1 promised to become one of the most robust and cost-effective rockets on Earth, capable of lifting 1.5 tons to Low Earth Orbit for as little as $12 million. (Rocket Lab's Electron, for comparison, costs $7.5 million to lift 0.3 tons to LEO, so Relativity would have been launching five times the payload for less than twice the price.)
But Relativity has its sight set on farther horizons now.
Citing delays in the arrival of new rockets from Ariane, Blue Origin, and United Launch Alliance that have created a "giant launch shortage" in the heavy lift market, Relativity decided to move up the payload scale with the Terran R.
Weighing in at a payload capacity of 23.5 metric tons for reusable missions (ones in which the rocket must carry fuel sufficient to go both up and back down), or 33.5 tons for expendable missions (where the rocket is allowed to burn up after delivering its payload), the Terran R rocket will actually outclass SpaceX's famous Falcon 9, whose reusable payload to LEO is only 22.8 tons.
In a further imitation of SpaceX, Relativity is designing the Terran R with a first stage that can launch and be reused at least 20 times. (At last report, SpaceX's record is 15 reuses of a single Falcon 9 first stage.) Relativity even wants to land the Terran R on drone ships at sea!
But Terran's not just aiming to beat SpaceX with the Terran R.
Anticipating that Ariane, Blue Origin, and United Launch Alliance will all bring new heavy-lift rockets to market eventually, Relativity is building the Terran R with 13 engines, enough to give its rocket lift capacity sufficient to compete with those rockets as well.
Compare and contrast
Space customers seem enthused by the prospect of flying on the Terran R. Already, Relativity Space says it has $1.65 billion worth of rocket launches under contract, and plans to bid on $3.7 billion more. Space investors like it, too. Investors have assigned a private market valuation of roughly $4.2 billion to Relativity Space, which has not yet IPO'ed.
That's probably similar to the value of United Launch Alliance -- which is reported to be for sale as its co-owners, Boeing (BA 0.25%) and Lockheed Martin (LMT -0.75%), explore strategic alternatives for their joint venture. $4.2 billion is far less than private investors have been paying for stock in SpaceX, however, which recently raised capital at a valuation of $137 billion.
When you consider that Relativity might soon have a launch vehicle similar in capability to both SpaceX's Falcon 9 and ULA's Vulcan Centaur, therefore, investors may wonder if $4 billion is too cheap for Relativity -- and whether an IPO might bring a better price.
Space is hard
There is one problem with such a scenario, however. Whereas the Terran 1 had begun flying, and might have begun running commercial missions within a year or less, Relativity doesn't expect to have the Terran R ready before 2026. Ariane, Blue Origin, and ULA, meanwhile -- despite their various delays -- are all much farther along in the development process, and hope to have their rockets flying this year.
Once all those rockets begin flying, however, the deficit of heavy launch capacity may quickly evaporate, such that by the time the Terran R does arrive, the need for it may already have disappeared.
Granted, there are variables to this calculus. On the one hand, if a sufficient backlog of launches accumulates as customers await the arrival of the Ariane 6, New Glenn, and Vulcan Centaur, the deficit in heavy launch may last longer than expected. In a recent talk, ULA CEO Tory Bruno predicted the deficit might "last about a decade." On the other hand, though, SpaceX has resumed work on Starship, its super-heavy launch vehicle, which will boast four times the planned payload of Terran R -- and be fully reusable. If Elon Musk succeeds in getting that one up and flying, the deficit in heavy launch capacity could disappear sooner than expected.
Long story short, while there does appear to be a window of opportunity for Relativity Space to IPO, that window may already be closing. Worse, now that Relativity has ditched the only rocket it had that was close to being ready to fly in favor of one that remains years away, it actually looks less attractive as an IPO prospect today than it did a month ago.
Based on how things look today, I think Relativity Space poses a relatively low threat to SpaceX.
