These are not the same kind of stupid. One makes the assumption that costs will always be the same, and the other makes the assumption that cost decreases are linear, or predictable. The former is much stupider.
They are exactly the same kind of error in that both assume stability over time. One assume prices are stable; the other assumes the rate of change is stable.
To be honest this whole debate is a bit academic. In one situation someone is saying "this thing costs a lot of money and so is a toy for the rich". At the time of the statement it's probably true! You might get into an error by saying "it will always be like that because it's expensive now".
But the issue is that, _even at the time of the statement_, the price has been decreasing over time! It's falsifiable at the time of the statement! You don't need to see the future to dismantle that argument.
Inversely, costs have gone down over time for a long time. You could make the inference that there's a floor, of course, and it's reasonable to do so! But it's hard to disprove the claim that prices will keep on going down.
The former is just on its face wrong based on the current facts, the latter is a judgement call about the future. Totally different beasts, and driven from different things.
Both are assumptions about the future. Neither is falsifiable at the moment of speaking. What would be falsifiable is a statement about the historic rate of change.
I agree that it's generally more likely that a 15-year trend will continue than change. If we're talking about a year, that is. But 5 years? 15 years? 100 years? 1000 years? At some point, the general assumption changes.
But without trend data, I also agree that assuming price stability a better general assumption than assuming a major price drop. Historically, very few things keep getting cheaper. It requires a) large society willing to keep making R&D investments, and b) a technological domain with a lot of possible ways to keep lowering costs.
And what I mostly agree with is the proverb, "It is difficult to make predictions, especially about the future."
They'll never be free. They'll never be cheaper than the raw materials that go into them, or the copper to wire them together and into the car.
At some point, there's going to be a price floor that the research, materials supply and competition simply won't break through.
Guessing when that is going to happen is more luck than anything. I do not see it continuing to get exponentially cheaper for long, though.
LiFePho has removed most of the precious metals out of the equation, and the demand for electric cars will continue to compete against the growth in demand for battery storage for renewables. For an analogy, lumber prices have shot through the roof over the past few years where I live due to construction booms. Nothing about the technology has changed, and supply hasn't fluctuated greatly. These same pressures are going to be pushing against lithium batteries getting exponentially cheaper over the next few years. I don't doubt that they will find room to bring prices down, but there is a floor out there somewhere close by.
I wouldn’t anticipate suddenly hitting a price floor, but instead the rate of reduction tapering off, which we’re not seeing yet in a clear way. There’s still a long way to go before we hit the limits from resource costs. And the current rate doesn’t need to continue for long before we start hitting price parity. In some cases we’re already there.
There's a floor but it's not just price of raw materials. It includes performance of same raw materials just used better. So a battery today with X amount of raw materials puts out Y power. A battery in 10 years with the same amount of X raw materials puts out Y^4 power. At least according to E=MC^2 it's a long way before we reach the floor.
Well, the theoretical floor is much further if one goes beyond Lithium. There are various prototypes that oxides aluminum potentially reaching energy densities greater than gasoline. Now, those are currently only reversible in the sense of using aluminum smelter to restore aluminum from the oxidized form. Still we do not know if reversible process is not possible at all in a compact device and the supply of aluminum is vast.
The paper says "We estimate that between 1992 and 2016, real price per energy capacity declined 13% per year". Where do you get your data for the last 5 years?
Regardless, 1 year isn't the correct duration for a bet. People average owning a car for ~6 years, and the average lifespan is something like 12 years.
But depending on terms, I might take a year-over-year bet for battery prices. Demand is high and the pandemic has caused significant supply chain problems. They could well have gone up this year. And indeed, a quick look at news reports suggests key components, including lithium and cobalt, are surging in price. Fine examples of why assuming a historical average has future meaning can get you into trouble.
One kWh of batteries generally requires around 200g of lithium. Both by weight and price it's a crucial, but small component, so unless it suffered a 10x hike, its price isn't relevant.
Meanwhile LiFePO4 batteries, which are currently the most popular chemistry(at least in China), contain no cobalt whatsoever.
Other analysts differ on whether these things will impact the retail price. But you make my point for me: this is an extremely complex problem, and making any simple assumption about future price is a mistake.
If you're coming up to the end of a logistic ("S") curve, then assuming a linear growth (or worse, a fixed rate of increase each year, ie exponential growth) is much worse of an assumption than assuming zero change, if you extrapolate too far.
A first order approximation is always less accurate than a zeroth order approximation for bounded functions, as the first order approximation will have unbounded error whereas the zeroth order approximation will not -- unless you are in the degenerate case of the first order itself being exactly zero. The first order approximation is infinitely worse. Most (all?) things in the world are bounded. Hence if you must choose between just a first and zero-th order approximation, the zero-th order is the way to go for long run predictions. Cue the XKCD comic about the expected number of weddings.
On the other hand, if you are not interested in making long run predictions but only short run predictions, then first order approximations will tend to be more accurate in a small region around the base, but that region might be quite small.
It's about mature and immature technologies. 20 years ago, photovoltaic cells had efficiency ranges in the single digits, but rising. When efficiency rises from 5% to 10%, it makes sense to assume that it keeps rising. But electric heaters had efficiency ranges around 95%, even when my parents were kids. Now they have even better efficiency - 99.8% in my newest apartment - which is only 5% better than 50 years ago - because there is a physical limit.
Technology follows an S curve. First it increases slowly, then faster, then more slowly again. It's silly to assume mature technologies will keep getting better at the same rate and silly to assume immature technologies won't get better. Without specifying the technology, one assumption isn't really sillier than the other - physical limits are unintuitive.
Any electric heater, even those decades ago, was 100% efficient. They turn electricity watts into heat watts. Where is the energy loss? Light? That also becomes heat. Air movement? Also heat. Loss due to heat allong the cord to the heater? Thats heat too. Unless they are emitting large numbers of neutrinos, all electric heaters are simply resistors that perfectly turn electricity into heat.
Put nearly any electrical device in a box, anything from a television to a cement mixer, and it will raise the temperature of the air in that box by exactly the same amount as the watts it draws from the power source. A 500w television puts out exactly as much heat as a 500w heater.
You can't have a wind turbine which extracts 100% of the kinetic energy from wind, because after it there would be a wall of unmoving air, and the incoming air wouldn't be able to get through the turbine.
Analogously, if electricity is carried with the flow of charge - electrons - around a circuit[1], when you extract 100% of the energy as heat, the electrons stop moving and build up in the heater. So you can take the rest of the wiring away because it's doing nothing and save 50% of your costs. Then, a buildup of charge makes a voltage, and a voltage potential difference can drive a current. Therefore you can get 100% of the power out as heat, save half your money on wiring, and use the growing potential difference to power something else. Electricity makes no sense whatsoever.
OK, so that's troll-physics nonsense, but does extracting all the "energy" stop the electrons moving? If not, why not, what energy isn't being extracted? If so, why doesn't that stop current flowing - isn't "free electrons" part of what makes something a conductor of electricity?
[1] though the energy is carried in the e/m field around the surface, somehow
On the other hand, a heat pump bumps the efficiency of your electric heater to like 300%, because it works around the physical constraint. My understanding is that air-source heat pumps are continuing to noticeably improve decade-over-decade.
The commenter was point out the nuance between the two, it's obviously about confidence in an assertion. You just re-reduced it to what was already obvious?
Investing in government bonds vs investing in penny stocks: both are the same thing, as they are both an excess of confidence in predicting the future.