The preliminary cost estimates are in the planned upgrade of the Ariane 5 launch vehicle and its Ariane 6 successor, and the one general conclusion can already be drawn:

Europe is in deep trouble.

European Space Agency (ESA) Director General Jean-Jacques Dordain said on Friday that it will cost 1 billion euros ($1.35 billion) for the Ariane 5 ME upgrade, which will allow the rocket to carry large payloads by 2018. The upgrade is needed to allow the rocket to keep up with the growth in the size of communications satellites, which Ariane 5 launches in pairs.

While that project is going on, it looks like Europe will have to find an addition 3 billion and 4 billion euros ($4 to $5.4 billion) to fund Ariane 6, which is set to enter service in 2021. The new rocket is being designed to launch single communications satellites into orbit for no more than 70 million euros ($94.7 million).

Meanwhile, SpaceX is marketing its Falcon 9 booster at the rock bottom price of $56.5 million. The California company also plans a test launch of its Falcon Heavy rocket later this year, which it will market at prices ranging from $77.1 million to $135 million depending upon the weight of the cargo launched.

The Falcon Heavy would be capable of launching pairs of communications satellites into geosynchronous orbit just like the Ariane 5 does today. However, it could do so at a significantly lower price than its European competitor.

SpaceX is also experimenting with recovering and reusing the Falcon 9 stages. The eventual goal is to bring launches down to between $5 to $7 million per flight. If the company can achieve that goal (and its not clear whether it will), then the entire launch market would be upended.

In essence, here is what’s happening:

Europe will continue to operate and will spend a great deal of money upgrading a legacy system that can’t compete with SpaceX on price;

ESA must simultaneously fund a brand new rocket that won’t be ready for another seven year and will still be more expensive to launch than Falcon 9 is today;

Simply upgrading the Ariane 5 will cost more than it cost to develop Falcon 9 and Dragon, which included about $400 million from NASA and $450 million from SpaceX;

The cost of the Ariane 6 will be many times what NASA and its partners put in to the entire COTS program, which developed two rockets and two cargo freighters to service the International Space Station;

By the time ESA finishes with either launch vehicle project, SpaceX may well succeed in rendering both rockets uncompetitive with a fully reusable Falcon 9.

Europe’s launch vehicle strategy has all the markings of fighting the last war. It will eventually get to something akin to the Falcon 9 early in the next decade. Meanwhile, an increasingly confident SpaceX is leaping ahead with bold innovations that ESA is not even contemplating.