Launch contracts are “worthless” until a rocket is proven and flying, Rocket Lab CEO says

Rocket Lab is waiting until Neutron is more technically mature before signing launch contracts with customers, CEO Peter Beck told investors on Wednesday.

The statements provide an inside look at how the space company is thinking about bringing the Neutron next-gen launch vehicle to market — and the lessons learned from selling the first rocket. , Electron.

“Until a vehicle is proven and flying, any launch contract you might sign is basically worthless,” Beck said during a third-quarter earnings call. “We can go and sign a contract to launch tomorrow with a lot of customers, but it’s like, a few thousand dollars down and can be canceled at any time. But that doesn’t really mean anything.

Rocket Lab will have to offer a “low introductory price” on its Electron vehicle if it hasn’t been proven yet, before its first commercial flight in 2018.

“We’ve carried some of the introductory prices over the years (…) Over the years, we’ve had some bad missions,” Beck added. “I just don’t want to go down that road again. (…) I’d rather come to the market with something that works, that commands a premium, then fill my display with a whole bunch of low-cost launches today .

His remarks were in response to a question posed by Citi equity research analyst Jason Gursky, who asked about the demand outlook for Neutron and when the company expects to get its first order.

Beck said they will have Neutron “on the pad” by the end of 2024 – more than a year away. In terms of demand, he said that the potential customers that Rocket Lab is talking to do not want one or two launches, but a larger batch that will launch their constellations. The risk of signing up too early with these customers is that if their satellites are delayed, there will be a large turnout that won’t fly.

“That’s not a happy situation either.”

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