Wright Weekly Weport Apr 2 2017

Dear all,
Welcome to the Wright Weekly Weport for April 2.
Economic Argument for Commercial Electric Planes
We wanted to lay out the economic argument for the Wright One (a.k.a. our electric 150 seater). The environmental argument is clear, but in order for the plane to succeed, it has to be “10x better” than the competition. In the airline industry, cost is the metric that matters. Our plane has to be so much cheaper that it’s a no-brainer.
For context, Boeing built the 787 to achieve 20% fuel savings over the 767. Fuel is such an expensive component of flying that 20% was considered sufficient to justify the development costs of a new plane.
In our case, the Wright One has the potential to achieve fuel savings of as much as 50%.
Here’s a stylized example:
Fuel plane:
  • A 737 burns 1,000 gallons of fuel for a 500 mile flight. For a 300 mile flight, let’s say it’s 600 GPH.
  • Jet fuel costs vary widely, but let’s say the price is $2.50 per gallon, or halfway between today’s super cheap prices and the higher prices from 2012.
  • This means the fuel cost on a 300 mile flight is 600 x $2.50 = $1,500.
Electric plane:
  • Our plane needs ~7.5 MWh (7,500 kwh) of energy for a 300 mile flight, and it has 12 MWh (12,000 kwh) of batteries on board including FAA reserves.
  • The two main costs are battery amortization and electricity.
  • Battery amortization:
    • Let’s say the batteries cost $200 per kwh. And let’s say the batteries last for 7,000 cycles (1). This means the battery cost per flight is 12,000 x $200 / 7,000 = $343.
  • Electricity:
    • Let’s say electricity is $0.06 per kwh. This means 7,500 x $0.06 = $450.
  • $343 + $450 = $793, or ~1/2 the cost of jet fuel.
It goes without saying that there’s lots of uncertainty in these numbers. Maybe jet fuel will get cheaper. Maybe electricity will never hit 6 cents per kwh. Maybe batteries won’t achieve 7,000 cycles. Maybe new fuel planes will be much more efficient than old ones. No one really knows for sure.
But there’s room for optimism:
Solar prices are on a relentless downward trend:
 
Batteries prices are also trending downwards:
Plus:
  • This study shows electric buses have nearly double the profit of fuel buses.
  • At least one optimist thinks electricity could be *free* in the future.
  • And this doesn’t even cover the fact that electric motors cost less to maintain than fuel engines, which further lowers operational costs.
So even if these numbers don’t work out exactly – maybe the fuel savings aren’t 50% but 40% or 30% – even that’s a huge deal in the aviation world.
If you’d like to read more about this line of thinking, check out Tony Seba’s Clean Disruption. (I’m biased because Tony is a friend and investor, but this is the book that inspired Wright.)
Note: the inspiration for this section is Blake from Boom. Blake is the classic entrepreneur-advisor discussed here. He’s a total phenom – he just closed Boom’s Series A – and still he managed to find time to spend an hour on the phone with me last weekend. Thanks Blake!
 
(1) We think we can achieve 7,000 cycles because our plane will have 12 MWh of energy onboard; the extra portion is for FAA reserves. This means we won’t have to cycle it below 20% in most cases, which increases battery life substantially.
Needless to say, would love your feedback! Thank you in advance!
 
People
Wanted to send out special thanks to a handful people who have been absolute rock stars over the past few weeks. Ian, Andy, Ben, Joe, Aaron, Chip, Tivan, Malay, Gustaf, Sam, Daniel, Fred, Katherine, Bennett, Mady, Mom, Dad, Slava, Noam, Mary, Blake, Hart, Abisola, Darold, George, Ken, DJ, Tori, Ralph, Grandma, Jenn, Nate, Sarah, Amira, David, Kate, Sophie, Tracy, Bruce, Jacque, Mrod, Abigail, Vicki, Dan, Aaron, Jim, Jonathan, Joris, Peter, and many many others. Thank you a million times!
Hope you had a great weekend.
Electrically,
Jeff
PS: We really hope you’re enjoying these updates. But if at any time you’d like to stop receiving them, please just do so here. No hard feelings — we all understand inbox overload!
PPS: Wright song of the week: Queen – Bohemian Rhapsody

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