Musk Is On A Learning Curve For $2,000 Robots

Will the Tesla Optimus become the new Model T?

Elon Musk has set out an aggressive learning curve to grow robot knowledge. He plans to have several thousand of his Optimus robots built this year. Initially these bots will be tested out in Tesla Factories. Musk has said they will cost $20,000 to $30,000 once released to the public. In 2026 he plans to scale up 10x to 50,000 units. He then hopes to repeat the 10x scale-up again in 2027 to 500,000 units. Elon recently talked about his vision for robot production at the Consumer Electronics Show (CES) in Las Vegas.

You can watch the full interview here.

Musk understands Wrights Law. In contrast to Moore’s Law, which is based on time, Wright’s Law predicts that with every doubling of cumulative product output, costs per unit will decrease 20 to 30 percent. SpaceX continues zooming down the Wright’s Law cost curve for satellite bandwidth capacity. ARK Invest is estimating a 45 percent decline for every cumulative doubling in Gigabits per second in orbit.

If the first robots are sold for $25,000 at 5,000 unit production and Tesla can achieve a 30 percent cost reduction per doubling rate, the price should be close to $2,059 in three years. This would represent a 92 percent decrease in price.

Musk has achieved these kinds of numbers before. Thanks to SpaceX the cost of putting things into orbit have fallen almost 98 percent since 2010. OurWorldinData reports the cost difference between the Space Shuttle and Falcon Heavy at $64,800 versus $1,500 per kilogram. This is a 97.7 percent drop. You get 43.2 tons on Falcon Heavy for the price of one ton on the Space Shuttle.

Henry Ford also followed Wright’s Law curve when he reduced the price of a Model T from $850 to $260 from 1908 to 1924. By the early 1920s more than half of the registered automobiles in the world were Fords. More than 15,000,000 Model T’s were built and sold.

We also calculated the time price based on blue-collar hourly compensation.

Note that the time price fell almost 90 percent from 1910 to 1925. You could get 10 Model Ts in 1925 for the time price of one in 1910.

Will the Tesla Optimus become the new Model T? In three years blue-collar workers are expected to be earning around $40 an hour in wages and benefits. A $2,000 robot will cost them 50 hours of work. In 1924 blue-collar workers were earning around 51 cents an hour. This would put the time price of a $260 Model T at 510 hours. For the time price of a Model T we will be able to buy over 10 Tesla robots. At these prices everyone will be able to have their own R2D2 and C3PO.

Americans have understood that growth is learning. The person that can learn the fastest and the most, while possessing the ambition to innovate, will create the greatest wealth. As America’s adopted son, Elon personifies this key insight.

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Gale Pooley is a Senior Fellow at the Discovery Institute and a board member at Human Progress.