How Does Elon Musk Use First Principles?

David Senra, reading Elon Musk, says first principles means breaking a problem down to what you are most confident is true, then reasoning up from that base and checking the conclusion against it. Analogy, copying what other people already do, is easier and is what people do most of the time. For something new, that thinking is too bound by convention.

Early at Tesla, people said battery packs would always be too expensive for a cheap electric car because they had been expensive. The assumption was that batteries would always cost $600 per kilowatt hour. Ask what the batteries are made of and what those materials are worth: cobalt, nickel, aluminum, carbon, polymers for separation, and a steel can. Buying that amount on the London Metal Exchange came to $80 per kilowatt hour. The remaining work was a clever way to combine those materials into a cell, which is how he knew batteries could be much cheaper than anyone else realized.

The same process became general purpose for rocket parts. Senra reads Musk's idiot index: how much more a finished product costs than its materials. A high ratio can be cut with better manufacturing, and he expects every engineer to know the best and worst parts by that index. Asking what other rocket companies charge is reasoning by analogy, and it does not show the true potential.