A1) AM Disruption at Different Scale – What is Happening and Wild Guesses (2)

In my first two articles of AfT blog, I already showed you the MECE deltas as the key to AM disruption, why those MECE deltas with current AM economics are difficult working towards profitability and the vitality and concerns of extra gains from AM product (check this and this if you missed). I hope that my data evidence, derivations, and explanations have helped clear a little fog of AM hype and doubt. But, I know that most of our AM hope, hype, and “harm” lie in the future instead of the present. We used to believe AM would fundamentally revolutionize how we manufacture. Instead, now we tend to believe AM will be a complementary tool to how we manufacture. We can’t resist looking into future, making our projections and asking

How will AM technology be developed in next 5 years? What’s the trend for the next decade?

And will those MECE delta work in the near future?

So do I. In fact, making projections, or wild guesses have always been my favorite “sport” throughout my entire research life: technology development projections, technology adoption predictions, and sometimes even political election wild guesses. I always learn a lot when my prediction meets reality, from both the goodness of fit and deviation. Of course, I am not a fortune teller. I proceed as a strategic analyst and my “crystal ball” is data. For additive manufacturing technologies, I’ve been collecting data for years to make those projections. In this article, I will share some of my “wild guesses” about the vital deltas and AM disruption I discussed before, based on the data I found.

The first vital delta I discussed in my last article is the machine depreciation. With the current AM machine price, generally AM production faces a yearly cost of $20k-$120k (polymer) or $60k-$270k (metal) from the machine itself. The machine depreciation can represent a huge cost segment ranges from 40% to even 70%. Knowing how AM machine will be priced can greatly influence the landscape of many technology strategies, and of course, the delta profit map I brought up in the AfT. The difficulty behind this is that AM has many factors (e.g., size, speed, accuracy, service, brand) that may influence the price, and sometimes impossible to standardize under different operating mode and conditions. I’ve tried many factors to connect with machine price, but in the end, I only found one that may work. A very simple one: the volume of the building envelope/chamber, or in an approximate but simpler word, the functional size of the machine.

Based on the data that I was able to find for the AM systems in the past decade, you can clearly see a trend that machines with a larger building chamber (or in simpler word, larger machine) tend to be more expensive, and metal AM systems tends to be one order of magnitude more expensive than polymer AM systems with similar chamber volume.

You may think so what? This is common sense to many people who are not even familiar with AM industry. Here is the fun part –

If we take those data and analyze their trend line following the temporal sequence (e.g., biannually as showed in my following analysis and figures), the pattern of how those trend lines move in the plot is very interesting. The trait may demonstrate how the price of AM systems was driven down over the decade, and possibly suggest how we project the future.

The price of polymeric AM systems has been driven down significantly in the last decade and seems to continue dropping especially large machines. The significant price drop of newly released systems seems to start at 2013 with about 20% decrease and follow with an even larger drop (even close to 90%!) until now. Reasons can be the cheap machines with moderate performance got bigger, or expensive machines with great performance got cheaper. My guess is both. Due to increasing competitions, the profit margin of the polymer AM machine has been squeezed out quickly. We possibly see that the price of more and more systems is reaching a fair margin close to their cost, even this year – 2018.

Metal AM is a different story but may turn out to a similar ending as polymer AM. From 2007-2014, the price showed nearly no changes. Even there is, a 10% fluctuation biannually at most as shown by the data, which is probably within the range of error. The drop of metal machine price started in 2015 with a possible speed of 30% biannually, although I don’t have enough data to get a trend line for 2017 & 18. The decrease seems to show no preference for machine size. It makes sense since the metal machine with large building envelope tends to have extra powerful components, such as bi or quad-laser and in-situ monitoring. Those components can be very expensive, which raises the costs of building such systems significantly and possibly rule-out a larger space of price dropping for larger systems.

With over 250 data points, my dataset is definitely not exclusively, may not objective, or even not accurate enough to have a bulletproof prediction. But I will make my projections not too further way (for the year 2020) with my confidence anyway and call them “wild guesses”. I hope these “wild guesses” can help you regarding strategy for AM development and deployment.

My #1 wild guess: starting at 2020, all newly released polymer AM systems will cost no more than $150k, despite the performance, size or functionality.

(I am pretty confident about this one. Although with limited data, we can already see such trend line now 17-18. In fact, HP released new full-color 3D printing systems yesterday at Feb. 5th, 2018 with a price range from $50k to low $100k)

My #2 wild guess: the metal AM systems released in the year 2020 will cost 50% less compared to a similar size machine in 2015.

(Assuming a continuing 30% reduction as suggested in 15-16, it takes 4 years to reduce 50%. I even leave myself some space for error. 😊)

The second delta I discussed before is AM material costs, which lives the devil sometimes. The material price is extremely high (10-400 times more expensive) as I showed you before. The reason behind is complicated including the physics of the process, the supply & demand, and the business model. Producing AM materials with a desired quality and form sometimes require extra processing steps, which inevitably raise the price by some. Especially for metal AM powder, the requirement of spherical shape and particle size distributions limits the yield of the extra step of atomization, which chains the bottom line of the price (check this). Additionally, the AM material demand is still marginal comparing to traditional material markets (e.g., total metal AM material consumption is about 1000t), which the economy of scale is poorly leveraged. But more importantly, the high material price set by AM OEMs may not even reflect the material production costs. AM material can be the cash cow for many OEMs. You can easily buy similar AM materials for a much cheaper price from an independent material supplier, but at a risk of less optimum output and losing machine warranty. All these factors can be improved when AM markets grow, which drives down the material price, open up new markets and keep driving it down. So the price of AM material is predicted to drop in the near future

But by how much? Unfortunately, unlike the machine, the data for the material price is much harder to find or ask as a researcher. As a result, my projections on the material price will be closer to wild guess and based on my speculation and other people’s projections.

My #3 wild guess: By the year 2020, AM polymer material price will decrease by 60%

(I made my speculation based on the recently released news by Carbon3D. Carbon plans to reduce their material price through a production-scale materials program, which aims at offering sub-$100 per liter material comparing current material price at about $250. The saving comes from the economy of production scale. Although we didn’t know how large their resin volume increase in production in the year 2017, but we can see with a similar range of volume increases, the price can hit a 60% reduction. I am betting such rule can be applied to other polymeric AM materials, and we can see such volume increase before 2020)

My #4 wild guess: By the year 2020, AM metal material price will drop by 40%

(Actually, you can buy 40% cheaper material now from independent suppliers. I am projecting that their material can reach the standard of the AM OEMs somehow by 2020)

Now I showed my projections for the year 2020 on the two major deltas I discussed in my last articles. Those new numbers for the year 2020 may change the landscape of AM disruptions. Such economics improvement can open up markets that you can charge extra $100/kg, but still may not be enough to tear up instead of knocking on the door of automotive industry or other industries with load bearing/engineering functional parts.

So my #5 wild guess: By the year 2020, AM will keep penetrating to the markets where deltas can be compensated by $100/kg, and we will not see a wild adoption in the automotive industry.

Here are my 5 wild guesses, do you agree or disagree?

Watch out for my next article for our blog “Additive for Thoughts” next week!

Thanks!

Runze