Main Engine Cut Off - T+245: Relativity Redesigns, Pivots to Terran R

Episode Date: April 17, 2023

After an unsuccessful first flight of Terran 1, Relativity has announced that they’ve moved on to a newly-redesigned Terran R. Overall I think this a good direction, but there are some serious questions to be asked of and headwinds to be managed by Relativity.This episode of Main Engine Cut Off is brought to you by 35 executive producers—Warren, Lars from Agile Space, Donald, Lee, Andrew, Russell, Joel, Ryan, Jan, SmallSpark Space Systems, Bob, Steve, Matt, David, The Astrogators at SEE, Simon, Tyler, Pat, Moritz, Stealth Julian, Benjamin, Robb, Frank, Dawn Aerospace, Fred, Pat from KC, Theo and Violet, Tim Dodd (the Everyday Astronaut!), Joonas, Kris, Chris, and four anonymous—and 836 other supporters.MECO Live at Space Symposium 2023! On April 18 and 19, I’ll be hosting several live shows—my first ever!—at the Redwire booth at the 38th Annual Space Symposium in Colorado Springs, Colorado. Redwire will be hosting a whole set of events on the stage at their booth, including 5 episodes of MECO and an Off-Nominal at happy hour.Find me at the Redwire booth (#1374). Come say hi and catch a show!TopicsLive at Space Symposium 2023! - Main Engine Cut OffRedwire Announces Live Event with Main Engine Cut Off Podcast, Previews Full Schedule of Activities at Space Symposium 2023 | Redwire SpaceT+182: Rocket Lab Neutron, Relativity Terran R - Main Engine Cut OffRelativity Space - Terran RRelativity Space is moving on from the Terran 1 rocket to something much bigger | Ars TechnicaRelativity shelves Terran 1 after one launch, redesigns Terran R - SpaceNewsThe ShowLike the show? Support the show!Email your thoughts, comments, and questions to [e-mail] @WeHaveMECOFollow @[e-mail] on MastodonListen to MECO HeadlinesJoin the Off-Nominal DiscordSubscribe on Apple Podcasts, Overcast, Pocket Casts, Spotify, Google Play, Stitcher, TuneIn or elsewhereSubscribe to the Main Engine Cut Off NewsletterMusic by Max JustusArtwork photo by John Kraus for Relativity

Hello and welcome to Main Engine Cutoff, I am Anthony Colangelo. I want to talk about Relativity's announcement regarding Terran 1 and Terran R from last week. Notably that they're bailing on Terran 1, moving on to Terran R right away, but they've also redesigned Terran 1, moving on to Terran R right away, but they've also redesigned Terran R pretty drastically, honestly. It has a lot of implications for their overall company direction, the kinds of things they're going for, the valuation that they currently have and what that's based on. There's a lot to talk about. I'm a little conflicted about certain parts of it, but I want to dive into all of that. But before that, I need to talk about the live shows that are happening this week. As I record

this, I'll be doing them tomorrow and Wednesday, April 18th and 19th at the Space Symposium out in Colorado Springs. I will be live at the Redwire booth on the show floor. They are kind enough to host me on a stage at their booth for Tuesday and Wednesday afternoons. So Tuesday, it'll be 1.45 to 3.30 p.m. local time, mountain time. And on Wednesday, 12.30 p.m. to 4.30 p.m. we'll be doing over the course of those two days, five episodes of Main Engine Cutoff, one episode of Off Nominal, all live. It'll be live streamed. It'll all be recorded and put on the podcast feed as well. So if you're not there, you will get all that content. Don't worry. I don't know exactly on the, I don't know the exact schedule and how that all come out because I am going to be very busy the next couple of days. If you are at the conference, stop by the Redwire booth, say hi, I will be doing the shows. I'll be hanging out

between them. I'll be hanging out surrounding them as well. And I will be elsewhere at the conference. So find me if you're there. I really hope to meet up with a lot of you. It's going to be an awesome time to just bring Managing Cutoff and Off Nominal live to one of the biggest conferences of the year, right in the middle of the chaos. It's going to be a lot of fun, really looking forward to it. So find me, grab some of the stickers and swag that I've got made here. So that's coming up this week. So keep your eyes peeled for that. But until then, let's dive into the relativity news. As I said, I'm conflicted because I think in a lot of ways this is a smart move for Relativity, and honestly, it's a move that I was hoping that they would announce much sooner. when they were still working on Terran 1 because it just seemed to have such a shelf life, such a low shelf life, once they announced Terran R. And it's funny to go back and remember the Terran R announcements.

And I say announcements because it was plural. First, there was this kind of teaser announcement. This was inary of 2021 um they teased taranar with this uh silhouette photo a really snazzy looking photo of like a rocket and silhouette and an exclusive interview with michael sheets over at cnbc but they did it right in the run-up to rocket lab announcing neutron uh like it started to break that rocket Lab was going to announce Neutron, and Relativity put out this teaser announcement real quick, kind of jumping the gun on it. And I thought it was just so half-assed at the time, with so light on details. I had a hard time believing any of it. It didn't seem sensible to me. Yada yada. Then a couple years, a couple months

later, I should say, they unveiled the plans for a fully reusable Terran R. Now it looks like Starship, and it has a Falcon 9 payload range to low Earth orbit, but it's fully reusable. It's got this whole thing. It's 3D printed, yada yada. All the relativity hype around that one as well. And here we are, almost two years later, and Terran 1 is off the table. They had all these problems printing the tanks for Terran 1. They have now redesigned Terran R to be a somewhat uninspiring Falcon 9 class competitor, still using their 3D printing additive manufacturing tech for engines, for tank domes, but they're moving to traditional manufacturing for the tank barrels,

given the issues that they had with Terran 1. So that kind of calls into question the whole mission statement up front, which was fully 3D print a rocket and launch it to space. That was sort of their thing. That's why they attracted so much hype. I think it's a big part of why they attracted so much investment. You know, they're north of $1 billion of investment at this point. And my whole thing, even when Tim Ellis was here on the show with me years ago, was are they a launch services company or are they an additive manufacturing company who happens to be doing launch vehicles right now? You know, were they getting all that attention and investment because of their factory aspect and not so much because of the launch

service aspect? Well, this is really going to, you know to test that thesis once they've downscoped what they're doing with the additive manufacturing in terms of we are not printing the entire vehicle. We are printing engines, we're printing tank domes, we're printing components, but we're doing a lot of traditional manufacturing. Are they still going to be as attractive to investors in the long run? And are they still going to be as attractive to investors on the timescales that we're talking about? With this announcement, they've went from, well, you know, they haven't updated this date in a while, but they were saying $10 is going to be 2024, 2025 time range. Now it's 2026 or later for a, again, pretty traditional heavy lift launch vehicle, medium to heavy lift. It's not heavy,

heavy lift, which is, you know, a whole class thing that we'll have to talk about, heavy lift it's not heavy heavy lift um which is you know a whole class thing that we'll have to talk about but it's a big vehicle um you know it's it's a almost five meter diameter i think it is a five meter diameter um it's got a big payload fairing you know up in the range of the bigger vehicles that we see from vulcan and arian six and falcon nine um it can carry so they say which is another aspect of this uh they can carry 23.5 metric tons to low Earth orbit with a downrange landing of the first stage that lands very Falcon 9 style. Kind of looks somewhere like if Falcon 9 and New Glenn had a child that was closer to the Falcon 9 size than the New Glenn size, but got a lot of commonalities between the two. They could do 5.5 metric tons to GTO,

Geosynchronous Transfer Orbit, so it's Falcon 9-ish range. It doesn't go any higher than that, which is interesting. So, you know, let's set that aside. We'll come back to performance in a second. But all this is going to come about, you know, in 2026 is their current timeline. Let's give it, you know, a year or two to shake out, you know, everything. They're going, again, they're going entirely different direction building this thing and manufacturing this thing. So, there's going to be some first-time operations, some new tooling. There's going to be a little bit of a spin-up time there. You know, it's not the promised, oh, well, we can just scale stuff up in our additive manufacturing thing and hit print at a bigger size, which is a thing that

they had said in the past. So, you can sense that I am very frustrated with Relativity through this announcement because I just find the way that this stuff has been communicated by Relativity over the years, not like they're outright lying about what they're working on, but they don't seem to change their minds so strategically. Or they do, but they don't tell you about it for so long that it just feels like such a snap decision and communicated in a way that has lost a lot of credibility in my eyes. You know, again, the Terranor original announcement had no details. It had a silhouette photo and some generalities about it'll be Falcon 9 class. And then the announcement of it being fully reusable said it would do 20 metric tons of payload to low-Earth orbit, also bringing along with it an entire ship, right? It's not just the payload. It's like the space shuttle. Space shuttle went up with, you know, 30 tons or whatever it was, 28 tons, 30 tons

of payload, but it also had an entire space shuttle orbiter with it that it took to orbit. This was doing 20 tons plus a ship, and now it's Terran R in a similar class, and it's doing 20 tons plus a ship and now it's Terran R in a similar class and it's doing 23 tons to low earth orbit without a ship, regular upper stage. So there's just, you know, was that stuff made up entirely? Was that just fan fiction that you wrote on original Terran R? I struggle with some of these announcements to find the line of credibility between them all. And even to the extent of Terran 1, talking about how that was going to be, oh, we're going to keep flying this thing alongside Terran R. Nope, actually, we're doing one and done, and we're moving on with Terran R because our customers asked us to.

Again, customers, there's probably some that care about flying on a bigger vehicle, but most customers just care about their thing getting to space safely, and they don't care really what color your rocket is to get there. So I always hate that line of reasoning. Like, oh, our customers really wanted us to move in this direction. I guess so, because that direction is space, but they don't really care if it's on Terran R or Terran 1 as long as their thing can get to space. So that seems always a little disingenuous spin to me. So I have overall problems with

the communication around all this, the stuff that does get announced and then goes back on, you know, that just chips away at credibility and the bank of goodwill that you have towards these companies. The other aspect is from a relativity, you know, before we get to actually why this is a good decision market-wise, which I will put in this show, from the company perspective, right, again, relativity started out with this mission statement of we're going to 3D print an entire rocket and launch it. And we hope to do that on Mars someday. It was this very inspiring vision that was drawing people in to work at the company,

to invest in the company. It was a good storyline. It had a lot going for it. It felt like very modern, pushing the boundaries. Let's do a fully reusable launch vehicle. Again, that felt like something where they were really pushing on the edge of the industry. And now it's kind of paired back to that utilitarian, we're going to do a vehicle that looks very much like all the vehicles flying today, but we're going to launch it in four years. And we're going to try to be

the best second in the market. And that's where we're going. That's great. I think that's a solid business model. Is it inspiring enough to the investors and the people that work there to continue to have the same intensity of focus as they had had in their early years? That's where I have question marks, and that's not something I'm going to answer today, right? The financing market is in a very different spot now than it was when Relativity got funded. What are the outlook for the investors right now as they look at Relativity and where they're heading? That's the stuff that I want to see. What is the retention going to be like between now and when Terran R launches? There's just stuff that we're going to have to see that are

longer tail items, but this does impact that a little bit, and I find that interesting. Again, they've taken in more than a billion dollars of funding. At some point, those investors are going to be looking for exits. They need to be able to not only have enough runway and operating cash to get through this time period to do an entirely new launch vehicle built with new stuff. They're far along in the engines, which is a big part, but they've got to do new tankage, new components, new launch site. There is a lot to do between here and there. They're going to take on additional funding to do that. Are they going to be able to find that funding for, you know, a moderately inspiring vision? Now, I want to get into why this is a

good direction for them generally, and given where they're at. But before I do that, I want to say thank you to all of you who support Main Engine Cutoff over at mainenginecutoff.com support. There are 871 of you supporting the show every single month. This is an entirely listener-supported show. We're coming up on seven years of the podcast, and it's grown all because of your support. And I'm able to take it on the road to Space Symposium because of your support. So if you like what I'm doing here, if you want to hear more of it, mainenginecutoff.com support. Join the 35 executive producers who made this episode possible. Thanks to Warren, Lars from Agile Space, Donald, Lee, Andrew, Russell, Joel, Ryan, Jan, SmallSpark Space Systems,

Bob, Steve, Matt, David, The Astrogators at SCE, Simon, Tyler, Pat, Moritz, Stealth Julian, Benjamin, Rob, Frank, Dawn Aerospace, Fred, Pat from KC, Theo and Violet, Tim Dodd, Everdashnaut, Eunice, Chris, Chris, and four anonymous executive producers, thank you all so much for the support. If you want to join that crew and get Main Engine Cutoff headlines in your feed, an extra show I do every single week with all the stories you need to know about, head over to mainenginecutoff.com slash support, sign up there, and that's it for that. All right, so why is this a good decision for Relativity? Well, the industry really needs a second competitor in this market space. SpaceX has the run on the joint right now. You know, they've got a huge lead with Falcon 9, Falcon Heavy. There was supposed to

be a Starship test flight this morning. So that's coming sooner than everyone realizes. Even the people that talk about how soon it is, I have trouble realizing that that launch was supposed to go off this morning. That's going to happen really quickly. Starship is going to be like the going bankrupt quote, very gradually, then suddenly. But SpaceX is only going to sell those launches for a little bit cheaper than the next best option on the market. So launch costs out there, right? Costs, prices that you pay if you were to go buy a launch vehicle today, those are going to remain at a certain level until there's pressure on SpaceX to bring them down and eat into the margin that they have over their internal costs. You know, I've seen some estimates of what

their marginal cost is for flying like a Starlink mission on their own vehicle in like the 15, $20 million range. I haven't seen a recent estimate on that, but they're still selling for, you know, 50, 60. If you're in the, if you're in the U S space force and you're putting a thing out to bid, you're going to be getting, you know, damn near a hundred million dollar Falcon nine launch given all the stuff that goes into it as well. So, so they'd have a huge margin there on these launches until they need to start chipping into that because somebody else is putting pressure on them. And there's really nothing on the market right now that's going to put pressure on them in any extreme way. Arianne 6 isn't, Falcon Centaur isn't, New Glenn doesn't really look like it, though I think there's

an outside chance that the decisions that Blue Origin makes on how they market that could put pressure on SpaceX, but I don't know that that's a very sustainable pressure to be put on SpaceX. So somebody needs to start putting pressure on SpaceX to lower prices overall for the market because there is market demand for that kind of thing to happen. But also, there's a ton of money to be made if you are that second provider. Amazon last year, you know, went out and bought all the other launch vehicles, Iran 6, New Glenn, Vulcan Centaur, Atlas 5, tons of launches were going to those companies. The US Space Force is obviously flying on those class of vehicles all the time.

So there is a ton of money to be made in that market. And nobody is really looking at an economical vehicle in that class. They're all kind of still working with old economics. The closest would be New Glenn, but we just have no idea what's going on there because they talk so little about it. It still seems so far away, and we don't know what their long-term plans are for it, or the timeline, or what to expect there, or the pricing, or anything like that. So the only things that we have to compare are kind of the old steadies, pricing or anything like that. So the only things that we have to compare are kind of the old steadies, right? The ULAs of the world, the Ariane 6, H3 out of Japan, it's pretty tight, you know? Small launches, certainly, but in the class of Falcon 9, there's not a lot to compare to.

So this does seem like the first real competitor that is near-term enough to put pressure on Falcon 9. Now, it just so happens that that's coming at the same time that Starship is going to put pressure on Falcon 9. And SpaceX, if everything works out with Starship, is going to have even more of a margin to eat into on any given launch cost. But nonetheless, there is that market. We are just a couple of months away from that National Security Space Launch Phase 3 program really kicking off with an RFP and the bids and all that. And remember, you can go back a couple shows to listen on what the deal with that is. But there's gonna be two lanes, right? There's the traditional lane two, which is Space Force is going to pick two providers that can hit all of their reference orbits, heaviest payloads to the highest locations.

And they're going to split a batch of launches. But there's another lane, lane one, where these competitors are going to be on ramped and then bid openly for different launches. They're still debating exactly what launch is going to go in what lane, but relativity would be able to pitch Terran R into that lane and could win a lot of work away from the smaller launch vehicles, or could maybe even pick off a program or a launch or two from Falcon 9 or whoever else is bidding in that lane. But they aren't quite there performance-wise to be able to bid for the full-on lane two that needs the highest performance to the highest orbits. Terran R's only got five and a half tons to GTO.

You need to be able to do about that to geostationary orbit, directly to geostationary orbit, right? Which is where Falcon Heavy comes in or the highest configurations of Vulcan Centaur with that big upper stage. So relativity would need to add, and I expect them to, would need to add a Terran R Heavy or something like that and just continue to go down the lane of, you know, what do the other launch vehicles look like? Put two side boosters on there and let's fly directly to geostationary orbit. Probably could get that payload range, just given this basic numbers with not a lot of detail beyond that, probably could get that kind

of payload range out to geo unless they're doing something really crazy with the upper stage. But that's not going to make the cut for phase three. Phase three is coming up real soon. If regular Terran R is in 2026, that they say, that's pretty easily 2027 2028 possibly then terran r heavy is not you know till 29 30 pretty far away so by then what has starship done to the market what is spacex doing with falcon 9 as new glenn really started operating as vulcan centaur trimmed in their costs so much that they're operating on a much more economical basis. Neutron, we haven't even talked about the slightly lower than this class payload range of Rocket Lab's Neutron. What has that done to certain sections of the market? Are they sweeping up on that lane one

and edging out Terran R and all of the launches that they are expecting to win from the US Space Force because they don't quite need Terran R capacity, and Neutron's going to be better on cost, better on performance, better on timeline. That would eat into the possibility for Terran R really gaining market share. So it's just, it's a far way away for a vehicle that operates like the ones that we know today. So I think it's the right direction overall, but it's a long road and there are a lot of countervailing forces. So I'm really interested to see how they manage all that. The neutron aspect of this all, and I will talk with Peter Beck this week. He'll be on one of the shows live at Space Symposium. We'll talk about neutron for sure. They just announced a suborbital

focused version of electron. Neutron is really interesting because it's kind of awkwardly large. You know, it's not this awkwardly large you know it's it's not this class that we're talking about it's not falcon 9 class it's a little below that um but they seem to think that that is the right payload range for the kind of stuff that they're interested in launching it feels a little awkwardly small to me right now and it feels like everyone's growing up market in the way that, you know, the small launch industry grew from a couple hundred kilograms to a couple thousand and now tens of thousands. But here's the interesting thing. Based on track record, I trust that

Rocket Lab would start Neutron out where they say and actually hit that payload range and then grow it. I have more trust in that than I do that Relativity will start Terran R where they say this payload range will be. You know, most of the new launch companies have had a really hard time ramping up their useful payload capacity to the stated figures. That's almost universal across the board, from Relativity's Terran 1 to Virgin Orbit to everyone in between. They've had a really hard time creeping up that launch mass. I think Rocket Lab is the only one I know that hit pretty close to it right from day one, if not right on it on day one, and grew it from there. So I have more trust that Neutron would grow in size

over its course of development than Terran R will start right at this payload range and nail it from day one. And that's an interesting aspect as well. It's like, can Neutron grow a couple hundred kilograms, a couple thousand kilograms over the course of a couple of years? And can they do it sooner? Can Neutron be flying in 2025, like Rocket Lab is saying? And if Terran R is limbering along until 2027, what does that two-year difference do? We saw Rocket Lab on the small launch side have a three-year head start on anyone even getting their first launch off the ground in that class. And Rocket Lab is now just searching for other markets to use Electronit. So can they do that again in this kind of middle to low heavy lift capability? That's going to be a really interesting thing as well. So overall, I'm annoyed with the way Relativity rolls things out. I do think this is the right direction. I wish they decided this two years ago and that they were two years further down on this roadmap.

And I'm interested to see how they do with the countervailing forces of some of the hype and sizzle kind of shined off the Relativity name. Can they keep up with the hiring and the retention and the investment? Can they keep that up and keep the runway long enough to pull off Terran R with all new tankage, all new launch site? They've got these engines in the flow, but there's certainly a lot of work to go before they're flying, let alone the whole recovery aspect of learning how Terran R flies. That's a lot. It's going to need a lot of investment. Can they get it? And is there an actual market here big enough to support something like this? And by the time that they're doing it, has the market not responded to the state of the market today to kind of edge out any of the upside here for Terran R? A lot of questions to be answered. But as always, really excited to have this kind of stuff to talk about,

especially heading into Space Symposium once again, live at Space Symposium, Redwire booth on the show floor, Tuesday, Wednesday afternoon. Come see me live doing five episodes of this show, one episode of Off Nominal. It's going to be awesome. We've got Lori Garver, Peter Beck, Caleb Henry will be there. John Bailiff, who's the CFO of Redwire, will be with me live.

Mike Gold will be talking with me and Wasami Onoda, who is from the JAXA office, runs the JAXA office in Washington, D.C. It's going to be awesome. We've got so many people. I blanked on half the list because I'm doing this real quick off the top of my head. But for now, that is all I've got for you. I've got to stop talking. I've got to go pack for Space Symposium, and I will see you live on the show floor tomorrow. If you've got any questions or thoughts, hit me up on email, anthony at mainenginecutoff.com, on Twitter at wehavemiko, or you can hop in the OffNominal Discord

over at offnom.com slash discord and join up there. It's an awesome community and we can coordinate some live Space Symposium meetups if you will be at the show. So until next time, thanks so much for listening. I will talk to you soon.