Elon Musk's SpaceX faces bankruptcy if Raptor engine issues aren't resolved quickly

A SpaceX rocket taking off
"The Raptor production crisis is much worse than it had seemed a few weeks ago." Photo credit: Getty Images

Elon Musk's SpaceX could face bankruptcy if serious improvements aren't made quickly to its next generation Raptor engines, according to an email seen by two news organisations.

Both SpaceExplored and CNBC reported the billionaire sent the message to all employees the day after Thanksgiving, describing the situation as "a disaster".

"Unfortunately, the Raptor production crisis is much worse than it had seemed a few weeks ago," Musk reportedly wrote.

"As we have dug into the issues following the exiting of prior senior management, they have unfortunately turned out to be far more severe than was reported. There is no way to sugarcoat this."

Musk then revealed that instead of taking the weekend off as planned, he was going to be working on the Raptor all night and over the weekend. He then asked employees without "critical family matters" to work too, saying it was time for all hands on deck.

"What it comes down to, is that we face a genuine risk of bankruptcy if we can't achieve a Starship flight rate of at least once every two weeks next year," Musk's email finished.

The giant methane combustion engines are designed to power Starship, the company's next generation rocket. It is planned to be used to ferry passengers and cargo to the lunar surface and then, ultimately, Mars.

The decision by NASA to award a contract to SpaceX for the development of Starship into a lunar landing vessel was subject to legal action from Jeff Bezos's Blue Origin earlier this year, although that proved unsuccessful.

However, with work halting on the project because of the legal problems, as well as ongoing issues with the development of spacesuits, NASA's initial plans to land astronauts back on the Moon have since been delayed from 2024 to at least 2025.

Earlier this month Musk had said he expected Starship to be launched into orbit for the first time as early as January, providing regulatory approvals were given by the Federal Aviation Authority (FAA).

However, orbital launches come with a heavy toll on engines, with as many as 39 needed to get Starship there, according to CNBC.

The issues with the Raptor engines will also have an impact on the rollout of the company's next generation Starlink internet satellites, according to Musk.

"The consequences for SpaceX if we can’t get enough reliable Raptors made is that we then can't fly Starship, which means we then can’t fly Starlink Satellite V2. Satellite V1 by itself is financially weak, whereas V2 is strong," he wrote.

The current Falcon 9 rockets used by the company aren't big enough to be able to put the next generation satellites in orbit, despite having launched around 1700 of the first generation.

In October it was reported the company had achieved a valuation of US$100 billion for the first time.