A 2016 EPA paper called “Cost Reduction through Learning in Manufacturing Industries and the Manufacture of Mobile Sources” estimated automobile learning curves at 84% to 88%.

Some think “steep learning curves” are a bad thing. Used in their first sense, i.e., how quickly someone learns, it’s the opposite. Learning or experience curves measure time reductions to do a task as repetitions of it double, as percentages. If it took you 10 hours to do a job the 1st time you did it, 8.4 hours the 2nd and 84% of 8.4 hours or 7.1 hours the 4th time, you’re on an 84% learning curve. If you took 10 hours for the 1st job and 8.8 hours for the 2nd one, and 88% of 8.8 hours or 7.7 hours for the 4th, an 88% curve described your experience.

Our 1981 auto industry work found that Product Demand fell at the equivalent of an 87.2% curve. As shown below, eventually, a flatter 88% learning curve for a car could intersect its Product Demand Curve. Then, production ceases, as its cost exceeds its sustainable price.

A steeper cost curve of 84% never approaches the Product Demand Curve; instead, it diverges from it. In such cases, Demand Frontiers limit sales.

Moral of the story: Steep learning curves are good.

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