The European Space Agency has signed its first contracts under the European Launcher Challenge, giving three German and Spanish rocket startups until 2028 to reach orbit.

ESA announced the awards on Thursday, describing them as an effort to expand Europe’s launch options and reduce reliance on SpaceX. The contracts are structured as milestone-based support rather than cash up front, underscoring that the real test is whether the companies can convert development progress into an orbital launch on schedule.

Spectrum has flown for 30 seconds and just won €197.8 million

Munich-based Isar Aerospace won the largest of the three awards, about €200 million ($233 million), the company said in a statement on Thursday.

The contract, worth €197.8 million, is funded mainly by Germany, with contributions from Austria and Norway, ESA said.

Isar is developing Spectrum, a two-stage rocket 28 meters high with ten engines. In 2025, the vehicle flew for 30 seconds from a dedicated pad at Andøya Spaceport in Norway before coming down.

A second Spectrum is being prepared for a qualification flight with payloads the company hopes to place into orbit. In its current configuration, the rocket can carry up to 1,000 kilograms into low Earth orbit.

“Europe is putting serious resources behind its space sovereignty and today’s agreement with ESA is another proof point,” said Isar chief commercial officer Stella Guillen.

Other contracts were signed with Rocket Factory Augsburg (RFA) and Spain’s PLD Space. RFA, also based in Germany, received €186.9 million to develop its RFA One vehicle, a three-stage rocket that will launch from the SaxaVord pad in the UK.

RFA One is designed to deliver payloads of up to 500 kilograms to a 500-kilometer sun-synchronous orbit.

PLD Space secured €158.9 million, mainly backed by Spain with support from Germany. In 2023, the company flew its Miura 1 demonstrator from Spanish soil and is using it to develop the larger Miura 5.

Miura 5 will launch from Europe’s Spaceport in French Guiana and is expected to lift up to 540 kilograms to a sun-synchronous orbit.

A fourth challenger, MaiaSpace, has not yet closed its agreement. ESA said its award process “is nearing completion and expected to resume in the coming weeks.”

The contracts do not provide cash up front. Companies unlock funding as they reach agreed milestones, and every provider must complete an orbital launch before 2028 to demonstrate it can deliver. ESA said proposals were reviewed by a board on business case, engineering quality, resources, schedule, and compliance, reflecting how closely launch capability is tied to technical execution and program discipline rather than funding alone.

“Now it is up to the challengers to prove they can deliver reliable launch services for Europe and compete,” said Lucia Linares, ESA’s head of strategy and launches for space transportation. “Getting to space is not easy and never guaranteed.”

Géraldine Naja, ESA’s director of space transportation, said the awards were intended to drive “competition among European launch providers.”

Bernard Liautaud calls Europe’s SpaceX reliance a huge risk

The funding comes as European governments seek to restore independent access to space for civil, commercial, and defense missions and reduce reliance on Elon Musk’s SpaceX, the dominant global launch provider.

Earlier, Balderton Capital managing partner Bernard Liautaud said the continent’s reliance on SpaceX was a “huge risk” and that Europe needed to be “more self-sufficient.” SpaceX has been valued at around $400 billion.

Leonardo, Airbus, and Thales have agreed to combine their satellite businesses in a new company with annual revenues of about €6.5 billion ($7.5 billion), with operations expected to begin in 2027 pending regulatory approval.

“Launch capacity is an elementary interest of a state,” said Andreas Schwarz, an SPD member of the parliamentary budget committee in Germany.

He added that governments should consider a broad range of options, from long-term launch commitments to taking stakes in providers, to ensure satellites can be placed into orbit when needed.