A slight feud played out between Relativity CEO Tim Ellis and Rocket Lab CEO Peter Beck about the usefulness of launch contracts for rockets still in development. Ellis explained why they do it and the benefits it gives both them and the customer.
Ellis and Beck differ on early launch contracts
In an interview with Tech Crunch, Relativity CEO Tim Ellis responded to comments made by Rocket Lab CEO Peter Beck about how useful launch service agreements for rockets still in development are.
In an earnings call, Beck talked about why it hasn’t shared any customers for its Neutron rocket, calling them “basically worthless.” Which is a reasonable statement if you think that they mean nothing if you don’t have a rocket to fly just yet, however, Ellis disagrees.
Contrary to Rocket Lab, Relativity has signed over $1.8 billion worth of early launch contracts for its Terran R rocket, which isn’t expected to come online until 2026. Ellis came back to Beck’s comments, saying, “deciding not to build a backlog is taking a business strategy that has failed pretty epically in history across other products, which is, ‘build it and they will come,’ without actually validating that your pricing and your product capabilities are something that solves the customer problem such that they’re willing to put up material cash up front.”
Beck’s reasoning for not promoting any early contracts is because he sees them as nothing more than a few thousand dollars that they can take back at anytime. However Ellis sees these as early strategic partnerships, rather than non-binding memorandums of understanding.
“The way that contracts are structured is they’re not cancelable anytime, they actually work such that as long as we develop the product that we say we’re going to develop within a reasonable time period, these contracts are going to be executed,” Ellis explains.
Ellis even shared that Relativity has been able to increase the price of Terran R over time as it learns what its customers need and willing to pay. This will also allow Relativity to hit the ground running with a long list of missions to fly immediately when Terran R begins flying. Although, that doesn’t necessarily mean that Rocket Lab hasn’t been looking for contracts at all.
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Terran R is years away compared to Neutron
Terran R is Relativity’s answer to break into the medium to heavy lift launch market dominated by SpaceX. Neutron is looking to enter the same market but for Rocket Lab. Both rockets are coming out with reusability in mind from the start as well.
Rocket Lab plans to begin flying Neutron in 2024, the company also has 22 Electron and HASTE missions planned along side development.
Terran R on the other hand, is planning to come online in 2026 as stated earlier. This is the only rocket Relativity is developing as it canceled plans to continue work on its Terran 1 shortly after its first flight.
So while Relativity is working on building partnership’s with future customers, Rocket Lab is doing the same with current customers as it continues operating one of the only SmallSat launchers successfully.
Ellis had one last jab towards the New Zealand CEO talking about how often Relativity beats companies in contract bids. “We have a 100% win rate against the competitors that were in those deals, trying to win them against us, and I can go on the record to say, Rocket Lab was absolutely in some of those deals.”
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