Fans of the Hyperloop, Elon Musk’s 800-mile per hour, air-propelled train will be happy to learn that their favorite billionaire is still heavily involved in the project. Musk tweeted out plans to build a test track for the project in Texas on Thursday, Jan. 15, 2015.
“Will be building a Hyperloop test track for companies and student teams to test out their pods,” Musk tweeted, “most likely in Texas.”
The truly interesting part is that Musk is also planning to hold Hyperloop pod races, probably to promote the transportation. The idea would be that student teams would build pods and test them on his track.
This news is exciting because despite all the publicity it has generated, the Hyperloop is still a basically unproven concept. Yes, pneumatic tubes have been around and operating for 150 years, but as far as I know, the idea of using them as a large-scale ground transportation system has never been tested. The closest thing to a test was the Beech Pneumatic Transport subway in New York way back in 1869.
“In order to kind of help things along, we’re going to create a Hyperloop test track,” Musk told The Texas Tribune, “something that’s maybe on the order of a five-mile loop.”
Musk did not say where in Texas the test track would be located, but his company, SpaceX, is building a private Spaceport near Brownsville. Brownsville is located near the mouth of the Rio Grande River, on the U.S./Mexico border. So there is a strong possibility that the track could be built in the Brownsville area.
Hopefully we’ll get a Hyperloop track up and running in a few years because we need more next generation transportation projects. Even if Hyperloop does not work, it might kick start interest in high speed rail maglev. High-speed next generation ground transportation is desperately needed.
Musk’s tweets did not say whether Hyperloop Transportation Technologies Inc. would be involved in the plan or not, but it seems that way. The startup created by JumpStartFund has recruited a team of engineers and UCLA architecture students to design a Hyperloop system. Obviously a test track would be critical for Hyperloop Transportation. One possibility is that Hyperloop Transportation would be among a number of groups competing to build pods to test in the speed-tube.
Why Hyperloop Could Be Extremely Profitable
A high-speed ground transportation system like Hyperloop could be enormously profitable if somebody actually built it. A customer for it would be United Parcel Service (NYSE: UPS), which reported a TTM revenue of $57.31 billion on Sept. 30, 2014, a $2.28 billion increase over September 2013, when it posted a TTM revenue of $55.03 billion. Another probable Hyperloop customer would be FedEx (NYSE: FDX), which reported a TTM revenue of $46.76 billion on November 30, 2014, an increase of 1.95 billion over November 2013, when it posted a TTM revenue of $44.81 billion.
The growth of the package delivery giants is being driven by the growth of e-commerce. The Internet is driving the growth of the package delivery giants as customers move their shopping online. Amazon.com (NASDAQ: AMZN) reported a TTM revenue of $85.25 billion on Sept. 30, 2014, larger than Target’s for the first time. Amazon’s TTM revenue grew by $15.12 billion between September 2013 and September 2014. It went from $70.13 billion to $85.25 billion in just a year.
That growth could increase exponentially with a technology like a Hyperloop available. Hyperloop could do for freight and passengers what the Internet did for information: greatly increase its movement and lower its costs. If something like Hyperloop could greatly lower shipping costs, it would be a huge boon for Amazon and companies like Walmart Stores Inc. (NYSE: WMT), which is now aggressively increasing its online retail operations.
If Musk needs a partner in his Hyperloop, he should give Jeff Bezos a call. Mr. Bezos has a lot to gain from Hyperloop and money to burn. It’s also the weird kind of thing that he likes to invest in; it is no crazier than those drones.
The Hyperloop would also revolutionize passenger transport. One thing I will note: the Hyperloop plans at Hyperloop Technologies Inc. do not seem to be ambitious enough.
The maps of the system don’t contain direct connections between many cities, such as Denver and Albuquerque, Jacksonville and Orlando, and Washington, D.C., and Atlanta, which seem natural. There is no provision for cross country travel either, which seems rather shortsighted. One route runs from Chicago to Salt Lake City but doesn’t push on to Reno and San Francisco, the route of the first transcontinental railroad, which seems very logical.
Faster Than the Airlines
If these things really move at 800 miles per hour, they would be competitive with the airlines. After all, a jet liner is nothing but a tube flying through the air. The actual travel experience wouldn’t be that different, and if the Hyperloop were cheaper and more reliable, most people would take it. A big reason Hyperloop would be cheaper is that it wouldn’t burn huge amounts of jet fuel and require an air traffic control system or large airports.
The math is definitely in Hyperloop’s favor here. The distance from San Francisco to New York is 2,907 miles. A Hyperloop vehicle traveling that route at 800 miles per hour would make the trip in a little over three and a half hours. The flying time from New York to San Francisco is four hours 54 minutes not counting the drive or train ride to and from the airport, so a transcontinental Hyperloop would be faster. The gate to gate flying time from San Francisco to New York is longer—five hours 25 minutes, according to Travelmath.com.
Both the actual travel time and the gate to gate travel with Hyperloop would be shorter. Remember, you could board the Hyperloop in Downtown San Francisco and get off at Pennsylvania Station in New York. I simply don’t see how airlines could compete with that, let alone the air freight industry.
There is an interesting conspiracy floating around about Hyperloop online. The Christian Science Monitor is speculating that Musk is using the possibility of a Hyperloop test track in Texas in an attempt to get that state’s legislature to allow his Tesla Motors (NASDAQ: TSLA) to sell cars directly to the public. Texas law requires all new auto sales to be done through traditional dealerships. Teslas are sold directly online or through Tesla Stores in malls.
This speculation is not as farfetched as you might think. Nevada’s state legislature allowed such sales in that state after Musk decided to build his massive Gigafactory battery plant in that state.
Still, no matter why he’s doing it, Musk’s Hyperloop Test Track could be a good game changer if it ever gets built. Just imagine the savings to taxpayers if government didn’t have to pay to maintain a massive highway and airport infrastructure like it does today.