NEWTOWN, Conn. --- JAXA developed the Epsilon to replace the M-V, which was too expensive for the agency's needs and not competitive with other small launch vehicles. While the Epsilon offers cost reductions compared to the M-V, costs remain high, threatening production of the Epsilon, even though it has launched only three times.
The Epsilon was designed to supplement Japan's H-2, and uses the larger launch vehicle's SRB-A solid strap-on booster as its first stage. However, Japan now plans to replace the H-2 with the H-3 by the mid-2020s. With the H-2 no longer in production, SRB-A production will no longer benefit from economies of scale. High costs are what doomed the M-V and led to Epsilon's development in the first place.
At the same time, there is increased competition in the lightweight launch vehicle segment. Epsilon competes with incumbents, like the PSLV, as well as new entrants, like Rocket Lab.
Due to higher costs, an unclear plan for the future, and intense competition, Epsilon will not become a major competitor in the international launch market. As a result, Epsilon production will not reach the level once expected.
Still, at least some Epsilon production will occur. JAXA introduced an upgraded version, with a first launch in December 2016. The launch vehicle will primarily carry payloads for the Japanese government. Once the H-3 enters production in the next decade, production of the Epsilon will likely wind down. It is possible that it will be replaced with a launch vehicle that shares components with the H-3.