Posted on 10/28/2023 10:36:48 AM PDT by conservatism_IS_compassion
What is Wright’s Law?
Pioneered by Theodore Wright in 1936, Wright’s Law aims to provide a reliable framework for forecasting cost declines as a function of cumulative production. Specifically, it states that for every cumulative doubling of units produced, costs will fall by a constant percentage.Wright’s Law Formula
Y = cumulative average time (or cost) per unitWhat is the difference between Wright’s Law and Moore’s Law?
X = cumulative number of units produced
a = time (or cost) required to produce 1st unit
b = slope of the functionMoore’s Law – named after Gordon Moore for his work in 1965 – focuses on cost as a function of time. Specifically, it states that the number of transistors on a chip would double every two years. Wright’s Law on the other hand forecasts cost as a function of units produced.
Measured over the decade to 2015, ARK found that a price forecast based on Wright’s Law was 40% more accurate than one based on Moore’s Law.
(Excerpt) Read more at ark-invest.com ...
Both Wright’s Law and Moore’s Law attempt to define the "experience curve.”Wright’s Law dates back to before WWII, and it requires/utilizes more data than Moore’s Law. Moore’s Law can be thought of as a special case of Wright’s Law subject to the assumption that production of transistors in digital chips increases at a specific exponential rate with the passage of time.
The obvious way to apply Wright’s Law is to plot
the cost per unit (or any other thing you hope will improve, such as the efficiency of a motor) on a log scale
against
the total quantity which has been produced to date - also on a log scale.Wright’s Law predicts that your data, plotted in this fashion, will fall on a straight line. You then fit a straight line to the data, and extrapolate into the future how much improvement will occur when, based on your estimate of the rate of production in the future. If you are talking about digital electronics, and you assume that the quantity will grow at an exponential rate with time, you have just switched over to Moore’s Law.
So we see that the variation of rate of production with time is the crucial lever which predictably controls the rate of improvement of any given process, not necessarily only in price per unit of production but also, possibly, in measures of quality of the units produced. Consider the example of the solar panel. Solar panels were a thing back in the 1960s, but their cost per capacity watt was so high that no one considered them unless other options were even more expensive/impossible - such as powering satellites in space. Consequently the rate of production stayed low until - even at that low rate of learning - the cost per watt started to be attractive to more and more applications.
Now rooftop solar is a thing, and has become more than just “a thing.” And the faster they get produced/installed, the lower the cost and the more they are bought and installed. Think: if your roof isn’t facing to the south, but is facing to the east and/or to the west, that isn’t exactly a show stopper if the installed price drops to half of what you would have paid for solar panels if your roof did in fact face south.
The big issue of solar power obviously is nighttime, and weather. But the cost of batteries is also headed down the Wright’s Law learning curve - and altho the effect of weather will never go away, cloudy days do not actually eliminate photovoltaic energy production.
The source article applies Wright’s Law to the time required to charge an EV battery up to 200 miles of range, and actually suggests that charging time might stop being a serious constraint within five years.
Dang impressive...
First build & successfully fly the first airplane, then develop an economics law...
Economies of Scale.
Yeah - but why did he change his first name to Theodore?
Very interesting article, bookmarked for further study. Thank you for posting it.
Excellent post, cIc. Reminds me of the informative forum FR used to be. Thank you! aam
. . . come into play only after learning progresses enough to cause scale.
Y = cumulative average time (or cost) per unit
X = cumulative number of units produced
a = time (or cost) required to produce 1st unit
b = slope of the function
Oopsie!In the original the formula itself is a graphic which doesn’t copy over directly, and I forgot to check on that, getting bogged down in the details of my discussion instead.
*Something along that line.
😎
Interesting... and thanks for posting.
ping
Interesting... and thanks for posting.
ping
I remember “marginal utility” that is that the last beer is less effective than the first beer.
Understand, Biden has been the disaster we expected, and the “Inflation Reduction” Act does not address inflation and is strictly, pretty much, a pro-electric vehicle law. Biden is responsible for the increase in fuel prices - and for seriously bad foreign and military policy.
But we are where we are. Namely, Biden policy has accelerated humanity’s learning, specifically in the electric vehicle space. And the “Inflation Reduction” Act is still in being, still promoting EV adoption. But, it’s a funny thing.Like all auto companies outside of Detroit, Tesla is non-union. And Tesla does not, in any appreciable way,
advertisesubsidize the MSM. And under Elon Musk,Initially Tesla was the only one to make electric cars, essentially, since the gas buggies took over from horses (and steam and electric cars) about eleven decades ago. And Tesla has never lost its lead in the EV space. Not even close, all protestations of Biden and the MSM to the contrary notwithstanding. So the situation is that Musk is a big Climate Change guy, specifically in Tesla’s EV pioneering and also Tesla’s solar power and mass battery storage industries. Biden’s policies promote everything Tesla does, while Biden and the MSM hate and demote Tesla itself.
The upshot is that the MSM basically hides Tesla. When they talk about Dealers’ reports that EV’s don’t sell, they are evading the fact that although Tesla sales have been on a virtual Moore’s Law pace (tho guiding for a slower growth due to economy uncertainty in the present quarter or even year), Tesla does not sell through a dealer network. So “dealers” deal in any brand other than Tesla. EVs other than Tesla don’t sell in America. And Teslas mostly don’t sell in red states.
But Tesla’s Model Y suv is the largest selling vehicle - EV or other - in China, and in Europe, and in the world as a whole. Tesla’s Model 3 sedan is available at a price slightly lower than the median car (of any type) sale in America. And the “Inflation Reduction” Act will make the payment on a Tesla more obviously even lower next year. Even tho Tesla, the profit margin leader in the whole auto manufacturing space but one, doesn’t need the IRA, Musk likes the IRA and is far from averse to exploiting it for Tesla’s benefit (while Biden et al grit their teeth and pay up).
The fact that the cheapest Tesla isn’t significantly lower (apart from the federal subsidy) than the median sale price of a car in America maps to the fact that Tesla is not yet competing in the lower half of the unit volume of the American car market. But Elon Musk’s style of management is fantastically aggressive at driving down cost. “Not yet” is far from “forever."
I respectfully disagree. Musk in many ways is still a hardcore lib, especially in light of things like EV's. For example, he's demanding more carbon tax on oil, all while saying the Dims shouldn't be so anti-oil they block drilling. Of course, this is so Tesla can sell more carbon credits to oil refineries.
Musk may not be a new style Dim pushing for transanity and such. But he's still very pushes the ideas Dims used to a decade ago.
All “green” power face the same dilemma’s
1.) When you need it the most, it produces the least, and if you try to store the power, all environmental benefit is lost and costs explode.
2.) While fossil fuels and nuclear have “economy of scale” and power density working to their advantage, these so called green power sources have the “law of diminishing return” apply to them in both respects.
As you stated, when you use more green power you begin to use the less than ideal locations for wind, solar and hydro, BUT you also begin to transport the power over longer distances on networks that are spread out, meaning not only a loss, but also a lot of copper for transmission lines, towers...
Of course because it’s “green” no one in our media asks about minor things like what’s to come with all those composite turbine blades? How much land is being devoted to wind turbine farms, how much digging is being done, concrete is used and access roads are built. What does it really mean economically when you have a bunch of little turbines that all require maintenance spread out all over the countryside?
No none really wants to dig to much (pun intended) about where some of the materials used in the batteries come from, the working conditions, use of child labor, safety, environment... Looking into how filthy it is to manufacture some of these batteries or to recycle them isn’t a question you should ask and our MSM pretty much avoids that topic, after all green = good and EV’s are green. And then there is that minor detail that some of these green power sources use heavy metals in their production such as solar panels, or that these so called green power sources have their own environmental impact may that be with killing birds and being noisy, or changing the entire ecology of a river with hydroelectric...
But, they are labeled as “green” and as such everyone must bow down.
The EV is a chrome plated turd.
It’s what you get in a society where you can literally sell people artist $hit in a can: https://en.wikipedia.org/wiki/Artist%27s_Shit
It’s all about feelings and perceptions for the people buying this care, what image they want to project, what groups they associate with, even how they vote or what gender they have... https://thenextweb.com/news/how-subaru-created-the-blueprint-for-selling-cars-to-lgbtqi-consumers
The traditional auto industry in the United States is hamstrung by union regulations that eliminate any innovation and by a financing model that also limits innovation. Dealerships are a financing model. A dealer keeps X amount of loan that pays for Y amount of product. Largely, a dealership has to take a certain amount of junk they can’t sell so they can get the few things they can sell. This is necessary because the manufacturers are set up to mass produce particular models on particular lines. If those models are suddenly unpopular the manufacturers can’t easily change to something else. Thus, the dealerships sometimes end up scrapping cars because they can’t be sold. They can’t be given away either as that would subtract other sales that could be made.
Tesla declared it wasn’t an auto manufacturer. They were a technology company. Therefore, they don’t use the handcuffs of the dealership financing model. They aren’t union, which means they can innovate as much as they want.
I think that fire insurance will eliminate any of the current types of batteries. If Tesla can invent another, less dangerous battery, then they’ll survive. I have the highest hopes that they will survive as the present manufacturers need to die so they can be reborn. If it hadn’t been for Obama breaking laws and tradition, we’d already have a better vehicle industry. Instead, he kept the old production models on life support. England did exactly the same thing. Because of that today there are no big British auto manufacturers. As far as I’m concerned, I’ll never own another American made car from what is known as The Big Three.
I agree that Musk is not a conservative in our understanding of the word. However:And under Elon Musk, Twitter X seems to be turning into the second coming of Rush LimbaughI respectfully disagree. Musk in many ways is still a hardcore lib, especially in light of things like EV's. For example, he's demanding more carbon tax on oil, all while saying the Dims shouldn't be so anti-oil they block drilling. Of course, this is so Tesla can sell more carbon credits to oil refineries.Musk may not be a new style Dim pushing for transanity and such. But he's still very pushes the ideas Dims used to a decade ago.
O’Sullivan’s First Law states that “All institutions which are not actually right wing will become left wing over time.” (Quote approximate but accurate)My point is that Musk breaks that mold because he is very much about the truth. He started out conventionally “liberal,” approximately. But when he is mugged by reality, truth wins relatively easily. Whereas your typical “liberal” would go into cognitive dissonance and talk nonsense rather than engaging with inconvenient facts. Reality has a funny way of confirming “conservatism” for the simple reason that the people who oppose conservatism the loudest are, in the main, snake oil salesmen.
So I suggest that “liberals” are watching Musk like a hawk. They are even floating ridiculous criminal charges against him. You would think he was Donald Trump!
This “Wright’s Law” thread is intended to alert FReepers to the likelihood that Big Auto, internationally, is in for a dreadful beating. But not from “EVs” in general (almost all brands will fail) but from Tesla in particular. But, if Musk’s right in his economic forecast, also from the behavior of the economy at large in the immediate future. Tesla has a substantial cash war chest laid by for that eventuality.
I agree broadly with your first two paragraphs.I think that fire insurance will eliminate any of the current types of batteries. If Tesla can invent another, less dangerous battery, then they’ll survive.
Here we disagree quite strongly; Tesla has formed its own insurance company and thus is acutely aware of risk. Part of Tesla’s sauce is the way it uses your onboard computer to help baby your battery - your computer adjusts the temperature of your battery to, for example, behave best during charging.On that other thread you mentioned a huge fire which you said started in a hybrid car. Guess what! That’s a telltale of the fact that it did not start in a Tesla. Tesla doesn’t do hybrids.
I will add that Tesla’s Shanghai “gigafactory” is Tesla’s main export hub. It exports cars from there by the multiple shipload, and if Tesla ever had a fire in one of those ships the cost would, to put it mildly, show up in the next earnings call. Hasn’t happened, ain’t likely to happen. IMHO.
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