Tue. Oct 3rd, 2023
SpaceX Ends Subsidies for Starlink Antennas to Improve Profitability

Elon Musk’s SpaceX has announced that it will no longer absorb the cost of the Starlink antennas sold with its satellite internet service. Jonathan Hofeller, SpaceX vice president of Starlink and commercial sales, explained during a panel at the World Satellite Business Week conference that the company has made significant progress in optimizing terminal production, resulting in the elimination of subsidies.

Consumer Starlink antennas, also known as user terminals, are now sold for $599 each. For customers with more demanding needs, such as those in mobile, maritime, or aviation industries, SpaceX sells antennas ranging from $2,500 to $150,000. When Starlink was first introduced, the terminals cost around $3,000 to manufacture. However, the company was able to reduce this cost to approximately $1,300 per terminal in early 2021. Now, according to Hofeller’s comments, the cost to produce each terminal is less than $600 due to the benefits of mass production.

The move to end subsidies is an important step towards improving SpaceX’s profitability. Gwynne Shotwell, SpaceX President and COO, has previously discussed the company’s goal of achieving a positive cash flow. In 2022, Starlink reportedly had a cash flow positive quarter, and the overall company turned a profit in the first quarter of 2023.

Although SpaceX has faced significant capital requirements due to its ventures in rockets, spacecraft, and satellites, the company has seen success with its Starlink service. As of May, SpaceX had approximately 1.5 million customers worldwide. While an exact updated figure was not provided, Hofeller indicated that the user base has exceeded that mark. The company aims to continue growing its user base and expand its service to reach millions of customers.

To date, SpaceX has launched over 5,000 Starlink satellites and continues to launch at a rapid pace. Recently, the company announced a partnership with European satellite operator SES to offer joint communications services to cruise ships, which both companies currently serve. This partnership is expected to expand with additional market offerings in the future.