Technology

Elon Musk’s Entrance into the Hyperloop Industry

On July 20, 2017, Elon Musk announced in a tweet that he has secured “verbal [government] approval” to create an underground hyperloop between New York and Washington D.C. This came as a surprise to the numerous hyperloop startups that spawned after Musk offered this idea to the public in a white paper written by his SpaceX engineers. Four years ago, Musk claimed that he was so busy with his other revolutionary ventures (Tesla, SpaceX, and SolarCity) that he wasn’t planning to build the hyperloop himself. Now that Tesla and SpaceX have working business models, Musk has changed his mind.

Of all the Hyperloop startups spawned after Musk’s white paper, Hyperloop Technologies Inc., or “Hyperloop One”, is the only company that have developed a working prototype so far. The prototype pod reached speeds of 200mph in its latest test in the deserts of Nevada,  a fraction of the 700 mph promised in the original white paper. The rest of the startups have made grand promises but vague progress. Although Elon Musk has had minimal involvement with the existing hyperloop startups, his name is often associated with those companies. Through a new tunneling venture, Boring Co., Musk will finally enter the arena of hyperloop competitors that he helped create.

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Incumbents enjoy a head start in the development of the loop, as well as stronger business and government relationships. But with Elon Musk’s entrepreneurial reputation, Boring Co. will likely receive favorable public attention in its debut project. Musk is also one of the few hyperloop executives that possesses prior experience in an utterly new industry. The commercial space launch market, dominated by Musk’s SpaceX, is not so different from the hyperloop ventures.

Both SpaceX and Boring Co. are commercial interpretations of what was traditionally government-run enterprises. The challenges and the lack of monetary payoff in early space flight mean that space exploration was originally government-sponsored with emphasis on symbolic value. As space technology became cheaper to develop, SpaceX and other space ventures found that there was a niche market waiting to be fulfilled. NASA’s budget for space travel has been on a steady decline since the heydays of the cold war. The retirement of the space shuttle in 2011 meant that the only way for the U.S. to recover its ISS astronauts is to spend $80 million per seat to use Russia’s 1966 Soyuz spacecraft. Commercial satellites had to be launched through costly and dated government rockets, until SpaceX revitalized the industry with private investment.

In a similar manner to government space travel, our state-owned Amtrak trains are often shunned in lieu of Greyhound buses and road trips with cars. The exorbitant cost of railroad construction and an unprofitable, government-subsidized public carrier means that there should be ample room for a hyperloop company to bloom once they develop a working model. Both industries require companies develop an efficiency in their businesses that renders government players obsolete. The public impact of the ventures means that both industries will have to wrestle with heavy government regulation.

Neither of the nascent industries have an established technology and business model. Though governments have been using similar methods of space flight for decades, the goal of private space flight is to disrupt that model with something drastically better. Space exploration ventures have a variety of approaches: SpaceX with home-seeking rockets focused on low-cost cargo transportation, Blue Origin and Virgin Galactic with reusable shuttles hoping to create a space tourism market. Hyperloop startups each have different approaches as well. TransPod Hyperloop focuses on high-speed passenger transit, while Arrivo wants to disrupt the freight market with high-speed cargo pods. Hyper Chariot promised supersonic speeds of 4000 mph using “railgun” technologies that could put existing hyperloops to shame in 2040. Elon Musk’s Boring Co. is the only venture that plans to build a hyperloop underground, through futuristic tunneling machines. There will likely be big winners and losers as the industry leaves the incubation stage.

Regardless of approach, Elon Musk’s entrance into the hyperloop race is an exciting turn for a relatively quiet industry. Musk’s reputation for turning absurd promises into reality bodes for Hyperloop publicity and investment. Time will tell whether Boring Co. is truly “in the loop.”

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