Elon Musk says SpaceX's Mars rocket will be cheaper than he once thought. Here's why

New York(CNN Business) The rocket and spacecraft at the center of Elon Musk's plan to colonize Mars could fly humans into orbit within one year — and cost billions of dollars less than he once predicted.

The SpaceX CEO said two years ago that it would cost between $2 billion and $10 billion to develop the hardware needed to trek millions of miles across deep space.

Musk said Saturday he now believes the cost will come in on the low end of that spectrum —"probably closer to a two or three [billion] than it is to 10," he told CNN Business' Rachel Crane during an interview at SpaceX's facilities in Boca Chica, Texas where Musk also unveiled the 160-foot-tall rocket prototype.

During an hour-long presentation on Saturday about the next steps, he also said the first passengers could board Starship and travel to orbit within a year.

The prototype, welded together in one month, indicates the activity that's taken place over the past 10 months as engineers ramped up development of Starship.

In the near future, SpaceX plans to light up its new prototype on a brief flight about 65,000 feet in the air. Within six months, SpaceX hopes to attempt to send an uncrewed flight into Earth's orbit, a feat that requires speeds over 16,000 miles per hour.

Starship is designed to launch into space atop Super Heavy, a monstrous rocket booster that would also deliver fuel tanks to fill the craft while it's in Earth's orbit for the journey to Mars. Both the spacecraft and rocket are expected to be reusable, which Musk said is the only way to make the vehicle affordable.

"In almost any motor transport — whether it's a plane or car, a horse, or bicycle — it's reusable," Musk said. "If you could use a car only once, very few people could afford to drive a car. So the critical breakthrough that's necessary is a rapidly reusable orbital rocket."

"That is the Holy Grail of space," he said.

Musk has spoken publicly for years about his vision for a spacecraft capable of traveling to other planets, and the blueprints have undergone significant revisions.

Analysts and critics have questioned whether SpaceX can fund such a project. Some have suggested that even Musk's earlier estimate that it would cost $10 billion was likely low-balling what it would actually cost.

In January, SpaceX cut about 10% of its workforce to save money, noting that projects like Starship "have bankrupted other organizations."

Building Starship on a relatively lean budget has been central to Musk's vision. He said during his first in-depth Mars presentation in 2016 that the biggest obstacle to sending humans to explore other worlds is not technological — it's financial.

He said SpaceX's mission would be to create a vehicle that could bring the price of Mars travel to about $200,000 per person, down from the $10 billion he estimated it would cost using currently available technology.

Musk told CNN Business' Crane on Saturday that choosing to build Starship out of old-school stainless steel instead of modern carbon fiber materials, a decision he announced in January, was key to making the design cheaper and more durable.

"It might be the best design decision I've ever made," he said.