During the recently-held Satellite 2021 “LEO Digital Forum” virtual panel, SpaceX President Gwynne Shotwell revealed that the Starlink terminal’s production costs have dropped by over 50% from its initial manufacturing prices.
SpaceX has launched over 1,200 Starlink satellites to orbit so far, and its beta service has been expanded to countries such as the United States, Canada, the UK, Germany, and New Zealand. Inasmuch as the satellite-based internet system has been well-received, however, the service’s cost remains quite premium, with customers buying the Starlink terminal for a $499 upfront fee and a $99 monthly fee.
Shotwell, for her part, noted in the recently-held forum that SpaceX had actually “made great progress on reducing the cost” of the Starlink user terminal. Initially, the Starlink user terminal cost SpaceX about $3,000 each, but today, Shotwell noted that the user terminals only cost less than $1,500 each. SpaceX had “just rolled out a new version that saved about $200 off the cost,” Shotwell added.
SpaceX’s challenges with Starlink’s production costs have been highlighted by Elon Musk in the past, with the CEO noting that the satellite internet system “needs to pass through a deep chasm of negative cash flow to make Starlink financially viable.” Accomplishing financial viability would require SpaceX to optimize Starlink’s production costs, an endeavor that would likely be quite similar to Tesla’s pursuit of cost efficiencies in the Model 3’s production.
Apart from discussing the Starlink terminal’s production costs, Shotwell also provided some insights on SpaceX’s plans for the satellite-based internet system’s service plans. According to the executive, SpaceX would likely not do tiered pricing, as the priority is to keep Starlink’s services as simple as possible.
“I don’t think we’re going to do tiered pricing to consumers. We’re going to try to keep it as simple as possible and transparent as possible, so right now, there are no plans to tier for consumers,” Shotwell said.