Most everyday thinking is reasoning by analogy: "This worked before, so it will work again." Analogies are efficient but cannot produce breakthroughs, because they are stuck inside precedent. First principles thinking escapes that limit by questioning the assumptions analogies take for granted.

Elon Musk applied this to battery costs. The industry assumed batteries were expensive because they always had been. Breaking a battery into its raw materials — cobalt, nickel, aluminum, carbon — showed those metals cost only a fraction of what finished packs sold for. By his account, much of the gap was manufacturing convention, not physical necessity.