What E-Cat Production, Investment Levels Would be Needed to be Insurmountable (Private Citizen)

The following comment was posted by Private Citizen in this thread

Assuming Rossi’s strategy is to produce so many units at so low a cost that no rival can gain market share, let’s ask:

1. How many units would constitute an insurmountable initial production?

2. What is the cost per unit to produce, including capitalizing the factories?

If Rossi produces 1,000,000 units at $1,000 ea he will need $1 billion in investment capital. Where is he getting $1 billion?

If he produces only 1,000 units, that is probably not an insurmountable market penetration.

Perhaps there is a sweet spot somewhere between, but the lower his production, the lower his chance of cornering the market and the higher the per-unit cost to manufacture. Will 10,000 units corner the market? 100,000? Lo ok how much Elon Musk is putting into battery development ($5 billion): that is a commitment to market share.

There, gang, is some metaphysical and quantitative speculation re numerous speculative angels dancing on the head of a speculative pin.

Private Citizen

  • Broadside

    A realistic market price for early production E-cats requires knowing more than just what it costs to produce the devices, but also the details of performance, durability, and servicing. Based on Rossi’s comments, it seems that the first commercial offering will be to provide not E-cats but heat as a service from an assembly of them. This will help to gain essential performance data and protect the intellectual property behind the E-cat while preparing for eventual mass production and sale of stand-alone devices.

  • Omega Z

    bachcole
    If I were the U.S. government, I would mandate the sale of E-cats to Iran.
    For the simple reason that if they continued with Nuclear development there would be absolutely no question among world powers as to their intent. International relations with Iran could then go forward with that knowledge.

  • http://bobmapp.com.uk twobob

    Dr Rossi has 10,000 plus pre orders for the E-cat.
    Should the E-cat X be offered too this 10,000 at £1,000 each.
    Plus installation. I for one, would snatch his hand off.

  • GreenWin

    Would it be reasonable to assume the adoption of LENR mirrors that of electric vehicles? We all know EVs work. They work well. They cost less (lifetime) than ICE, and are environmentally friendly. But sheeple are wary of new pastures. Even when guided to lie down in them.

    • http://bobmapp.com.uk twobob

      How are EVs better environmentally than ICE’s?
      You still have to charge them a also dispose of the battery at end of life.
      First having made said battery, EV’s Nice idea but not environmentally friendly.
      Now an LENR electrically powered vehicle that would be.
      ( Should the environment need a friend)

      • US_Citizen71

        Batteries are recyclable and it is cheaper to use recycled batteries than new materials to make new ones. So I don’t there will need to be much encouragement to do so. Supplementing a LENR reactor with a battery makes perfect sense as the reactor can run continuously which should be more efficient than starting and stopping one and would allow a smaller lighter reactor to be used.

        • http://bobmapp.com.uk twobob

          LENR powered vehicles with battery Is what will Occur.
          I have no doubt that once LENR has been Accepted,
          That 20 years from now that will be the norm’ or even steam cars.

          • Omega Z

            LENR with battery cars my come in time, but before then there needs to be a new battery technology breakthrough. After that, it will take at least 20 years to replace the existing car fleet. Throw in an initial ramp up of 5 years & your looking at 25 years.

        • Omega Z

          Lead acid battery recycling is cheaper then producing new ones from raw material. That is not the case for most batteries. Recycling other types of batteries can cost 200 to 300 percent more. You will find consumer demand for recycled batteries, but not willing or not able to pay the price.

          As a Rule, Most recycling costs more then Raw material. Exceptions tend to be metals. Many metals are economical to recycle because most are multipurpose. If you manufacture electric wire, you need virgin copper, but all copper is highly recyclable because it has so many other uses that don’t require virgin copper tho may need some in the mix. You will find this situation with most metals. Some uses require virgin ore, but most due not.
          ————————————————————
          It is my hope that LENR will make many things cheaper to recycle, but note, not all recycling issues are about energy cost. Like electric wire, some uses require virgin state material.

          Many plastics uses need to be of virgin origin. The primary recycling use of plastics tend to be pallets, new garbage containers to place plastic waste into & these uses have a limited market. Ultimately, you don’t have enough use for recycled plastic. You have a surplus that ends up in the landfill.

          This is 1 area where LENR could be of help. Big Oil has developed a process where this plastic can be reverted back to it’s virgin state or basically crude oil. You can then use it for anything you choose.

          The problem with their process is it is extremely energy intensive. No one would make the required investments in the technology without knowing the cost of oil will forever be above $80 a barrel. I think with what we know at this point that LENR would make it so cheap that it would always be cheaper to recycle over the use of virgin oil pumped from wells.

  • Bernie Koppenhofer

    Dr. Rossi is too smart to think he will corner the market for any length of time. He will do his
    best via trade secret and patent strategies, but the technology (f9) is just too profitable/important, it will be copied and the legal battles will begin.

    • Albert D. Kallal

      But being a first mover in any industry is a HUGE advantage.

      Rossi has time on his side. Like Apple with their phones
      (or tablets), the FIRST mover advantage is huge in the market place.

      Chrysler Canada was first out the door with their
      Mini-Van. In fact for the past 22 years, they held the #1 spot in Canada. While
      competition been fierce for mini-vans, the “first mover” advantage is often
      what we call a “real estate” grab in the technology industry. Once you “grab”
      that land, then it is rather hard to move one off that space.

      Apple did the same with smartphones. The cell phone
      market was HYPER competitive. Yet Apple walked right into the market with a
      first mover product (the tough phone with software).

      And today there are several companies producing better
      tablets then Apple, but Apple “grabbed” that market first – so other players
      have to pick up the left overs.

      And same goes for Windows – they grabbed that marketplace
      first. So while great desktops are made by say Apple or even free Linux ones, Microsoft
      remains a leader in that market spot. However Microsoft in the phone market is
      doing poorly despite a great phone product (no first mover advantage).

      Rossi can do much the same in regards to LENR. Whoever
      gets a mass produced LENR product into the marketplace will enjoy that “first
      mover” advantage for many years to come – even with STIFF competition. And like
      ink jet printers, you have to purchase re-fills. So why change over from a
      Rossi e-cat you have and purchase a General Electric one? (you have no reason to
      change). So yes, one can grab a marketplace – and once grabbed, it is VERY hard to push one off the top of that mountain.

      Regardless, we are still a good number of years away from
      mass produced LENR products. The niche market of Rossi selling the energy
      product (as opposed to selling LENR devices) is the first step Rossi will have
      to take. This should then in turn build up momentum and allow one to garner
      investment dollars.

      You can’t raise money for LENR right now because for most
      if not all of the investment community does not believe in LENR.

      So it really simple that the money for mass produced LENR
      products does not exist. And yes, this is somewhat of a chicken and egg issue!

      Albert D. Kallal
      Edmonton, Alberta Canada

      • http://www.thinktankreport.com/ Phillip Power

        Basically agree. Rossi could already have put a simple E-Cat on the market as a “heat multiplier” for oil or gas heated swimming pools. Al Gore would have bought one of the first, shown it off to his Twitter followers and the rest would have been history.

      • Omega Z

        Albert
        You left out one important factor.
        Product/consumer loyalty. People don’t change even if a competitor may come out with something better. To lose a loyal customer, you either have to make them mad or the competitor must come out with a product far far better then yours. With the latter, a consumer may still hang on for a bit to see if you will offer a similar improvement.
        —————————————————-
        Consumer has a broken product. He takes it to his usual technician. Technician says I can’t fix it. I can sell you a new one. Now the consumer takes it to a competitor. The competitor tech says no problem. Fixes it in short order & charges a much cheaper rate then his preferred tech…

        New Customer. NOT!!!
        Next time that person has a problem, he will return to his regular tech. Obtaining a new customer from a competitor can be one of the biggest expenses of business.

  • oceans

    Thanks for this post private citizen as Rossi Marketing Team must be asking many of the same questions how to introduce millions of new devices to the market and how and who will install them.

  • Fyodor

    I’d also add that the jump to mass commercialization will take much longer than people think. Making 1000 or 100000 of something mechanically or scientifically complex that has never been done before is a highly unpredictable exercise.

  • Fyodor

    I guess it depends on what you mean by “insurmountable.” I don’t think that Rossi yet has any patent protection, though I might be mistaken. I guess that a lot will depend on how much can be reverse engineered from a single product.

    I am extremely dubious that even if Rossi successfully achieves real commercialization that it will be in the form of products sold to end users. Beyond the regulatory allowances, the economics/practicality of selling to large scale industrial customers are much more favorable for at least the following reasons.

    1. An industrial customer with hundreds of Hot-Cats used for heating or power generation and whatnot can have an engineer or technician to manage it. For domestic customers you have to make something *so* reliable that it never breaks down. This is a much harder engineering achievement, especially with something as complicated as the E-cat

    2. Along the lines of no. 1, if an industrial customer is running 100 hot-cats , individual Hot-Cats can go off from time to time without the system failing. For a customer with a single 20KW heater you need a much higher level of reliability.

    3. Less danger or copying/reverse engineering with large customers that can sign agreements and/or be monitored.

    4. The economic value and energy savings of a 10KW or 100KW heat source is much greater for someone who needs high production continuously all the time, such as a factory, rather than intermittently, like a home user.

  • Bob

    I believe it is a fallacy to think that one can eliminate competition with mass production and low cost! I am not an economist, but I have worked in business for many years. As often, I look to history to compare current thinking with what might happen. I believe history shows that mass production thesis is short lived.
    .
    One of the best examples is Ford Motor Company. The original “mass production” philosophy. Henry Ford is credited with the production line and front runner of mass production. It is true that he made great market share and made lots of money. However, there was still much competition,
    during the early hay day, even from the likes of Studebaker. There were many car companies and when totaled, Ford may have been the number 1 seller, they did not sell more than the others combined.
    .
    Ford produced only one model of car, one color with very few options for a long time. Henry fought the idea of making the new Model A and additional options. Other companies were starting to offer a wide range of options and this would have left Ford far behind if they had not followed suit…..i.e. kept up with the times. This was only about 15 years after Ford made the first Model T.
    .
    No, I do not think mass production will ever hold off competition for long. Someone will either invent a more economical way of producing the product (such as Ford originally did) or others will start offering better models with more options that leaves one obsolete. (Just as Ford almost did a few years later)
    .
    I would ask fellow posters for any examples of a company that controlled the market for a product via mass production after just a few short years of introduction. I can think of none.
    There have been monopolies, but not due to mass production. Utility companies that owned power lines, or right ways certainly monopolized. Trains at one time did, but again because of physical limitations. Even Apple could not monopolize due to mass production. They had to invent proprietary attachments, code and marketing schemes. They relied upon patents and lawsuits much more than production volume.
    .
    I am afraid Rossi is mistaken that mass production will fend off competition but for only a very short while. I would be interested any successful examples.

    • Brent Buckner

      YKK has done pretty well on a mass production based competition strategy. “Controlled the market” would be an overstatement – but “shared in oligopoly” may not be.

    • Albert D. Kallal

      The key concept is “how long” of a time does one enjoy the market advantage when being that “first mover”. In technology, it often not who is the best, but who gets there first. See my other comments about Apple etc. So no this first mover advantage never exists forever, but it can often go a long way to owning major parts of a new product segment.
      Regards,
      Albert D. Kallal
      Edmonton, Alberta, Canada

    • LookMoo

      On top of you common sense argument there is a Political level as well. Russia will never let a US or EU company dominate and price their energy markets (and thereby control the political agenda). The same goes for China.. simple never happen… not, nada, nil, zero, alldrig…. chance.

      They will release their own clones

      However, ecat technology will be a Klondyke. Just as when horse traders shifted to cars.

  • ecatworld

    I’m assuming this post refers to the E-Cat X, which Rossi continues to state is something that you will buy “off the shelf”, again, implying it is not an industrial, but a consumer/domestic product.

  • wizkid

    The cost per item shold be less than $200 each to build. 200 million dollars, Plus cost of the assembly line, which is out sourced anyway.

    • Omega Z

      wizkid
      Product cost is much more then the average person realizes.
      For a large concern producing energy products,

      A Legal department with additional lawyers of various expertise on retainer,
      Departments such as Human resources, payroll, accounts receivable, Product sales, Materials purchasing, Technical/product support All with Management personnel & many secretaries. It’s not unusual to find business with several hundred employees to have a 1st aid department with a full time RN on staff.

      Likely a product development department with continuous R&D. LENR would require both physicist & chemical engineers & engineers of various other fields.

      Multiple buildings, a large assortment of equipment, vehicles. Janitorial staff, maintenance personnel, technicians, installation/setup teams There will be licensing, certification & safety study costs.

      Insurance: For the business & vehicles, for employees while at work or traveling on business, Product liability, Unemployment insurance, About $10K per Employee health plan & Property tax that can easily run in the Million$. And like everyone else, Utility costs. There will also be substantial transportation cost. Not just product shipment but for all employee related travel.

      Aside from those employees that work production, All of the above costs huge sums of money & are required to manufacture product, yet produces no income itself. And I’m positive I’ve left much out.

      Note that once the product leaves the plant, If this is a consumer product going to a big box store, Most of the above costs applies to them also. Thus each $1 costs $2 to the consumer.

      Just so You Know. When I purchase things, I complain about price like everyone else. But there are many products that while complaining, I’m also wondering how can they sell it so cheap with the above taken in consideration.

      • wizkid

        I owned and operated my own business for over thirty years. You too?