Hyperloop may be the super-fast transportation of the future, but investors are slow to come

It’s been almost a decade since Elon Musk launched the idea the hyperloop, a new mode of transport that promises to move people and goods at the speed of airplanes while remaining on the ground. The technology, its proponents claim, is affordable, energy efficient and potentially profitable for its operators. However, after years of study and testing around the world, few hyperloop projects have made it past the initial feasibility study phase, and no investor is sufficiently convinced of their promise to pay to build one. .

According to Musk’s vision, which is based on a vacuum tube train » A concept that dates back to the 18th century, a hyperloop system would consist of closed low-pressure tubes that stretch for hundreds of miles. Inside, magnetically levitated (maglev) tracks support capsules carrying passengers and cargo that would travel at speeds of up to 600 miles per hour, more than three times faster than high-speed trains. fastest high speed in the world.

In traditional modes of travel, such as trains and airplanes, a significant amount of energy is lost by overcoming friction and wind resistance. If a vehicle can eliminate friction and air resistance, it can theoretically travel at very high speeds with relatively little power. Of the existing transportation technologies, the closest thing to hyperlooping are maglev trains, which eliminate friction between tracks and wheels, and have been built in countries like the UK, Japan, Korea and China. But hyperloop takes the concept to another level by confining a train in a low-pressure or vacuum tube, thereby also removing air resistance. Musk’s white paper claims he would only need 134 horsepower, about as much as a low-end Toyota Corolla, to hit 700 mph. For comparison, a high-speed train needs two 2,250 horsepower diesel engines. A 2017 study by the U.S. Department of Transportation (DOT) estimates that the hyperloop could be up to six times more energy efficient than air travel on short journeys.

Hyperloop builders include billionaire-led startups and public-private joint ventures

There is no shortage of engineering interest in making the hyperloop a reality. After Musk’s white paper was published, a series of startups were founded with the same goal of building the world’s first passenger hyperloop. Probably the best known is The Boring Company, co-founded by Musk himself in 2016. The Boring Co. built a prototype tube about a mile long in Hawthorn, California, as the site of an annual student competition to test hyperloop pods. The company plans to test a “full-scale hyperloop” as early as this year, it said in april without sharing details such as location and size. The Boring Co. did not respond to a request to elaborate on the plan.

In November 2020, Virgin Hyperloop, a subsidiary of Richard Branson’s Virgin Group founded in 2014, performed the world’s first human hyperloop test on a 500-meter test track in a Nevada desert. A prototype pod carrying two Virgin Hyperloop employees went from zero to 107 mph in under six seconds, then came to a screaming stop in a ride that took a total of 17 seconds. “I felt a bit of a kickback, but nothing uncomfortable,” Sara Luchian, passenger experience manager at Virgin Hyperloop, said of the extreme acceleration experience in an interview with the Observer. after the test.

That same year, Virgin Hyperloop released a 19-page feasibility study on a proposal to build a 500-mile passenger hyperloop route in the Great Lakes region that would connect Chicago, Columbus and Pittsburgh. However, the project was abandoned after Virgin Hyperloop decided to focus on carrying freight, not passengers.

In the United States, the only passenger hyperloop system that is actively under development is a 300-mile route, also in the Great Lakes region, that would link Chicago, Cleveland and Pittsburgh. The project is a public-private partnership between Hyperloop Transportation Technology (HyperloopTT), a Los Angeles-based startup, and the Northeast Ohio Areawide Coordinating Agency (NOACA), a local agency responsible for planning and overseeing major infrastructure projects in the Cleveland metropolitan area. .

“Cleveland is midway between America’s largest city and its third largest city. If we can build a hyperloop that allows people to travel from New York to Chicago in less than an hour with stops in between, that will open up a whole new range of jobs and business opportunities,” said Grace Gallucci. , executive director of NOACA.

In December 2019, HyperloopTT and NOACA co-published a feasibility study prove that the Great Lakes project is financially viable. The report, which is 180 pages long and costs $1.3 million, is the most comprehensive hyperloop study ever conducted in the United States, Gallucci said.

According to the study, the Great Lakes hyperloop will cost between $25 billion and $30 billion, or $60 million per mile, and six years to build. Once in service, passengers can expect to pay around two-thirds the price of a comparable airline ticket.

“We are considering commuter train type pricing. It’s not meant to be anything like the Concorde,” Gallucci said, referring to the supersonic jet.

The math from NOACA looks encouraging. But skeptics say the actual cost of building the hyperloop could be much higher and vary widely by location. The cost per mile of the Great Lakes hyperloop is more than three times what Musk predicted in 2013 for a hypothetical route between Los Angeles and San Francisco.

A study 2016 by Australia’s University of Queensland estimated that a hyperloop route along Australia’s east coast would cost ten times more than Musk’s prediction, “which relied on underdeveloped or immature technology,” wrote Nicholas McLean, the author of the study. And that ignores the fact that major infrastructure projects often go way over budget and take longer than expected to build anyway.

A long road to fundraising and regulatory approval

HyperloopTT, backed by venture capital firms such as Lauder Partners and China’s EdgeWater Investments, has built small-scale hyperloop prototypes in France, Germany and the Middle East. Its longest system built to date is a 10 kilometer tube in Abu Dhabi. “The technology is ready,” said Andrés De León, CEO of HyperloopTT. But there is still a long way to go before engineers can innovate in the United States.

The 2019 feasibility study estimated that construction of the Great Lakes hyperloop would begin in 2023. But with less than four months to go until 2023, the project has barely passed its next stage, which is an environmental review by the Federal Railroad Administration, a process that can take a few years. HyperloopTT will likely need to navigate additional regulatory hurdles before it can actually carry passengers and cargo, for which legal standards have yet to be established. (That job falls to DOT’s NETT Council, created in 2018 under the Trump administration and tasked with developing standards for regulating emerging transportation technologies.)

Gallucci said a question she often gets is why her agency doesn’t consider more mature technology such as high-speed rail, which has proven safe and widely used in countries like China and Japan.

“The answer is, we’re happy to look into high-speed rail if private investors are interested,” she said. “But the truth is that there have been no studies done in the United States showing that high-speed rail could generate substantial profits.”

De León hails from Spain, which has the second largest high-speed rail network in the world. He said the payback period for high-speed rail is between 100 and 120 years, while the hyperloop can recoup its construction costs in less than 25 years. According to NOACA calculations, investors in the Great Lakes hyperloop project can expect a 3% annual return, which is higher than most corporate bonds.

Still, fundraising seems to be difficult. Gallucci said NOACA decided to leave the effort to HyperloopTT, its private partner, after unsuccessfully applying for government funding. De León said his company is in talks with several major infrastructure investors but has yet to secure funding. “They have shown some interest, but they want to wait for the end of the environmental study”, for which funding has also not been found.

A promising source of public funding is the $1.2 trillion infrastructure bill, signed into law by President Joe Biden in November 2021. Hyperloop projects may be eligible to apply for grants and loans under an advanced vehicle program from the Department of Energy, according to Bloomberg Government, an analysis company.

“Ideally, we want this project to be 100% privately funded, but that doesn’t rule out the possibility of involving the public sector,” De León said.

Historically, major transit projects were usually funded by taxpayers’ money or government bonds. But the public-private partnership, known in the infrastructure sector as the P3 model, is an emerging trend in the developed world, De León said, due to the growing demand for infrastructure improvements and the reduction of costs. government budgets.

Given all of its financial uncertainty, the hyperloop may need government funding if it ever goes beyond the planning stage.

“I wouldn’t bet my money on making something like Hyperloop financially viable,” said Bent Flyvbjerg, an economist specializing in megaprojects at the University of Oxford. The Guardian in a 2017 interview. “But that’s okay. We subsidize all kinds of other infrastructure, so why not hyperloop, if we think there’s an environmental or business justification for it?”