How Does Elon Musk Earn From SpaceX?

Elon Musk is one the most influential people alive on earth right now. On top of that, he is also the world’s wealthiest man. His wealth primarily stems from Tesla and SpaceX. He is the founder and CEO of both of these companies. However, Tesla is a public company, but SpaceX is still a private company.

SpaceX is one of the most consequential space launch vehicle companies globally. It does the majority of private satellite launch business. According to SpaceX, they have been profitable for a long time. 

As the CEO of SpaceX, Elon Musk draws a salary from SpaceX. Moreover, he gets performance bonuses depending on milestones SpaceX achieves. 

However, these salaries are negligible. Unlike an employee, who draws a salary to support their family and lifestyle, SpaceX and Tesla directly satisfy Elon Musk’s needs. So, he draws a nominal wage compared to other CEOs in America.

SpaceX makes money in four ways:

  • Government contracts
  • Private satellite launch
  • Private astronaut launch
  • Starlink

Government Contracts:

SpaceX has military and NASA contracts to launch government satellites, send cargo to ISS, and ferry astronauts to the International Space Station. In 2011, when NASA retired the Space Shuttle Program, the US lost its capability to send astronauts to space. Since 2011 America has been dependent on Russian Soyuz rockets. NASA commissioned Boeing and SpaceX to make a human launch vehicle to eliminate Russian dependency, respectively.

SpaceX has successfully developed the Crew Dragon and has been ferrying astronauts to ISS. This contract helps SpaceX to earn billions of dollars each year.

Moreover, SpaceX launches the US military, US Airforce, and other defense departments’ satellites. It’s a lucrative business, and only ULA and SpaceX are doing business in this market. The US government will never hire a European, Chinese, or Indian rocket to send satellites to space for national security reasons.

Private Satellite Launch:

Currently, SpaceX dominates the private satellite launch market. No other company can send a satellite to space at a lower cost than SpaceX. As a result, Russian Soyuz, European Arianespace, and Indian ISRO lost a lot of business over the years. These launch companies are only surviving because of the government’s help. 

SpaceX developed a reusable rocket. No other company on earth has done it before. Even though the Space Shuttle was partially reusable, the first stage and the booster were non-reusable. However, for SpaceX, not only the first stage but also the crew dragon is reusable.

SpaceX has proved that its Falcon 9 rocket can be reused up to 10 times. As a result, their launch cost is unrivaled in the space industry. So, SpaceX has the lowest launch price and captures most business.

Private Astronaut:

SpaceX is the only private company that can send astronauts to space. Currently, they are one of the few agencies that have this capability. Other than SpaceX, only China and Russia have this capability. 

Elon Musk has leveraged this capability and recently started sending commercial astronauts to space. No other space company other than SpaceX sends private astronauts to space. 

Starlink:

Starlink is a satellite internet company established by Elon Musk under SpaceX. He leveraged SpaceX’s core strength to form Starlink.

Currently, HughesNet and Viasat also provide satellite internet. However, as these companies don’t have their launch vehicle and no satellite manufacturing facilities, they hire other companies to develop and launch satellites for them. To lower cost and provide global coverage, they use geosynchronous satellites, which are placed 22,236 miles (35,786 kilometers) above the earth.

As these satellites are placed too far from the earth, HughesNet and Viasat’s internet service are unreliable, slow, and costly. 

On the contrary, SpaceX places its satellites at 350-550km above the earth. Because of these low earth satellites, Starlink’s internet is reliable, fast, and cheap. Hughesnet and Viasat’s internet speed hardly crosses 25Mbps, whereas Starlink provides 100Mbps speed all the time. As a result, Starlink has a huge demand and has hundreds of thousands of customers globally. Soon, there will be a million Starlink users globally.

Elon Musk’s Starlinks is a huge success. Seeing the success, Amazon also announced that they would create a satellite constellation named Kuiper to provide satellite internet similar to Starlink.

Satellite internet is a lucrative business for Elon Musk’s company. Even today, 15 million people in America don’t have high-speed broadband internet. For localities where laying out fiber optic cable is unprofitable, Starlink is the easiest and most elegant solution.

Government contracts, private satellite launches, private astronaut launches, and Starlink help SpaceX earn billions of dollars yearly.

As SpaceX earns more money, its valuation goes higher. A 2022 Bloomberg report showed that SpaceX is valued at $125 billion. At this estimate, Spacex is the most valued private company on earth. 

As a major shareholder, the more SpaceX’s valuation goes higher, Elon’s net worth moves even higher.

Elon doesn’t need to sell his shares to fund his lifestyle. He can take loans with SpaceX shares as collateral at a very low-interest rate. It’s similar to the home equity loan, where we put our homes as collateral to get money from banks.

However, SpaceX helps Elon with housing and commuting.

Elon Musk lives in a $50,000 house near Boca Chica. The house is owned and maintained by SpaceX. In Austin, Elon Musk rents a house that Tesla pays for. Therefore, for housing, he doesn’t need to spend anything.

SpaceX has several private planes that Elon Musk uses for his businesses. There are also numerous SUVS that he uses owned by SpaceX. All the purchase costs, insurance, fuel, maintenance, and other expenses related to these vehicles are paid by SpaceX. Thus, Elon doesn’t need his own money to use these private planes or vehicles.

Elon is one of the most influential and important people on earth. Thus his and his family’s security is paramount. SpaceX each year spends millions of dollars on his security. Therefore, Elon doesn’t need his private money to provide protection for himself.

In summary, as a founder, CEO, and majority shareholder of SpaceX, Elon Musk is primarily compensated by performance bonuses from SpaceX. He also draws a small salary from SpaceX. However, the majority of his costs, such as housing, commute, and security, are provided by SpaceX.