When Elon Musk put forward his white paper in 2013 laying out his vision for a hyperloop between Los Angeles and San Francisco he suggested that it would cost somewhere around $6 billion. While Musk made it clear that he was too busy to work on the project, he encouraged others to, and they are finding it will likely cost considerably more than Musk suggested.
Hyperloop One’s costs will be considerably more to construct the project
According to investment documents that Forbes was able to get its hands on, Hyperloop One has found that Elon Musk’s numbers were way on the low side for the proposed project. The documents are believed to have been presented to potential investors during the Hyperloop One’s last round of funding where it secured $50 million a couple of weeks ago.
ValueWalk's Raul Panganiban interview with the founder of ValueWorks, Charles Lemonides. In this interview, we discuss the opportunities he is seeing in the market today. Q2 2021 hedge fund letters, conferences and more Interview with ValueWorks' Charles Lemonides ValueWalk's . . . SORRY! This content is exclusively for paying members. SIGN UP HERE If you Read More
Hyperloop One along with Hyperloop Transportation Technologies (HTT) are the two companies presently spending the most money to make the Hyperloop a reality. The former is hoping to begin transporting freight by 2020 and passengers in 2021, but the documents suggest that Musk’s numbers were little more than a pipe dream. That said, Hyperloop One in other documents showed fantastic profit margins around 2030 if the company can make it happen.
When Musk presented his white paper one of its cornerstones was the fact that Musk viewed the planned high-speed rail system between the two cities as the acme of folly and suggested that not only would the system blow away the rail system as far as speed goes, but also cost less.
Essentially, Musk outlined a mode of transportation that would cost somewhere around $11.5 million per mile to reach his $6 billion figure. But the investment documents uncovered by Forbes had those costs rise considerably to somewhere between $84 million and $121 million per mile or a system that would cost $9 to $13 billion just to cover a loop (hyper) around the Bay Area.
Of course, the Los Angeles to San Francisco route is now just one of many being proposed around the world. Hyperloop One is looking at an underwater cargo-only endeavor in the United Arab Emirates and many other routes have been proposed with costs per mile varying wildly.
Hyperloop still cheaper than high-speed rail?
Despite the costs being considerably for Hyperloop One when compared to Musk, it is still less expensive than the proposed high-speed rail project in California connecting the two cities with numerous other stops.
Hyperloop One CEO Rob Lloyd stressed this in an interview with Forbes last weekend after verifying that these papers were indeed used during the company’s latest funding round.
“These are high-level estimates,” Lloyd said. “I feel very comfortable in the view that we continue to state: That we are two-thirds the cost of high-speed rail and three times faster,” he continued.
Throughout the interview, Lloyd pointed out that the company is far from concentrated on the route originally put forward by Elon Musk in 2013 and that the company is looking overseas to get started on shorter routes and cargo to reach its goal of a functioning cargo hyperloop in less than five years time.
If you look at Elon Musk’s plans to attempt the colonization of Mars, it’s clear the man is both a dreamer and a visionary whether his numbers or the technology will add up in the future we will simply need to wait to stand in judgment.
And again, Musk and his companies are not building a hyperloop.