Elon Musk Provides an Optimus Update Including $20,000 Target Price

Elon is known to be a tad optimistic with his estimates, but perhaps that is what makes him this generation’s greatest entrepreneur?

If you thought rockets or electric car companies were really hard and might take decades to complete, it would be wise to select a different problem to solve. Something quick and easy.

In a recent interview, Elon spoke at length about Tesla’s Optimus humanoid robot. Here is the full interview if you want to also hear about free speech and middle school humor:

And just the humanoid part (this account is a great follow if you want a firehose of humanoid news):

Optimus Version 3 in 5-6 years for $20k

Elon Musk is big on first principles thinking, distilling something down to its simplest form. For manufacturing, this means thinking about the bill of materials for a part, not how much it costs from a supplier or in labor to make it themselves.

If a part is a half pound of aluminum with a couple pieces of rubber and screws, he would estimate the price of the chunk of aluminum, rubber, and screws. If that comes to $2 and a supplier charges $200 for the part, that is an opportunity to make it themselves and lower the cost in the long-run.

When it comes to the Optimus robot, Elon estimates $10k for the bill of materials. The first version will be quite expensive, as they are paying suppliers for some parts or individually machining parts themselves before setting up a massive automated factory.

He believes the third major iteration of a product is when it can hit scale and bring the humanoid price down to the massive automated factory price of $20k.

If the first version comes out in 2025 (just for industrial use in warehouses), the next two years later (an expensive one consumers can buy), and the third version two years after that, we’ll have a very different world in 5 or 6 years!

Humanoid, What is it Good For?

“Everyone wants a robot buddy … it could take your dog for a walk, it could mow the lawn, it could watch your kids, it could teach your kids.”

That sounds ok, but not amazing. However, have you ever looked back at how people thought computers would be used?

“I think there is a world market for maybe five computers.” Thomas Watson, president of IBM, 1943.

Ok that was a long time ago, how about a more recent example:

Paul Krugman, winner of the Nobel Prize in Economics, wrote in 1998, “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ — which states that the number of potential connections in a network is proportional to the square of the number of participants—becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”

The impact of new technology isn’t obvious. Experts who dismiss it look like fools in the long run.

Let’s hear the optimistic vision from Elon:

“I think the useful humanoid robot opportunity is the single biggest opportunity ever. Because if you assume the ratio of humanoid robots to humans is at least 2:1, maybe 3:1, because everybody will want one and then there will be a bunch robots that you don’t see that will be making goods and services.”

So basically the equivalent of the $3T car industry is coming just a few years.

Do Humanoids and AI Unlock Remove Humans as the Limiter on the Economy?

Let’s end this week with a couple of deep thoughts to noodle on:

“Once you have general purpose humanoid robots and autonomous vehicles, you can build anything… The economy is really just the average productivity per person times the number of people, and if you’ve got humanoid robots where there’s no real limit on the number of humanoid robots, and they can operate very intelligently, there there’s no meaningful limit to the economy.”

“The most likely issue is how do we find meaning when AI can do everything we can do a bit better? ... Maybe there’ll be some crisis of meaning.”

If you removed screens from today’s world, it wouldn’t look all that different than the 1960’s. Transportation hasn’t drastically changed, we are still using cars with similar rules of the road. Airplanes are more common and look more like moving cattle. We live in similar homes, sleep in similar beds, eat similar food, and so on.

Fast forward 10 to 20 years when humanoid robots are fully rolled out. Suddenly the future will look nothing like the childhood of the Boomer generation.

Let your imagination run wild.