Hello everyone, today HNFC wants to dive into the Innovation sector.
What is a hyperloop? What plans Elon Musk has for the near future?
This article is not a portrait of Elon Musk and all his accomplishments nor a description of his Hyperloop project. Through the following analysis, HNFC tried to study the current state of Innovation – with a capital I – and the impact that Musk has on it, because such a subject cannot be approached without mentioning the South African genius.
It is no secret that Innovation is facing a decline in recent years. Jeff Hammerbacher, a Facebook engineer, once stated “The best minds of my generation are thinking about how to make people click ads, and it sucks.”. With the Subprime crisis enlightening the weakness of our financial system, investors became far more cautious in their decisions. We went from an era of huge-risk investments, with the purpose of creating whole new markets and industries, to a “safe” chase of easy money with ads, apps and other entertainments. Most of the last breakthrough innovations were virtual ones and this trend will likely continue. Jonathan Huebner, a physicist in the Pentagon’s Naval Air Warfare Center, was one of the first to present Innovation as a “finite resource”. In a paper called “A possible declining trend in worldwide Innovation”, Huebner used a tree-metaphor to describe the actual state of Innovation. According to him, Man has already climbed past the major limbs representing the “game-changing” ideas like electricity, airplane or telephone and is now left with the thinner top limbs, mostly refining past inventions. Going further, Peter Thiel – co-founder of Paypal – promoted the idea that Innovation had let people down: “We wanted flying cars, instead we got 140 characters”.
Despite this, among the madness of a now Hollywood-like Silicon Valley, one man keeps creating and imagining what looks like child dreams. Whether he talks about creating cities on Mars, self-driving cars, Artificial Intelligence with a human face or solar-powered cities, Elon Musk has already proven he was the kind of man that does not throw ideas around without backing it up. According to Forbes, the fortune of the current CEO of Tesla, SpaceX and Solar City is now valued at around $19,3bn. Even with his image of “toy-maker for rich people”, Musk is often compared to Steve Jobs as one of the biggest inventors of the last decades. As always, his last project raised some skepticism. The Hyperloop, as he calls it, aims to transport people in a pod circulating by “levitation” in a network of tubes. With this system, the vehicle is free of frictions and air resistance, conveying people at an optimal speed. In a TED talk (you can find the 40min video in the following link) , Elon Musk explained how he sees this project and how it can fit in his new company: The Boring Company (or TBC).
Musk founded TBC in December 2016 with a simple idea, going underground is easier than going up: “The deepest mines are way deeper than the tallest buildings are tall”. You can create as many levels as you want underground. The aim of The Boring Company is to reduce traffic issues – starting in Los Angeles – by creating an underground network of circulation, avoiding congestion. In these tunnels, cars would circulate in little capsules and reach a speed around 200 km/h which would – according to Musk – allow passengers to go from Westwood to LAX in 6 minutes (approximately 45 min with today’s usual transportation). You can see a prototype of the project in a little video available on the home page of the company’s website. As people raised concerns around the price of such a project, Musk reckoned it was the main obstacle, estimating a cost of approximately $1bn for 2 kilometres of tunnel. Thus, the biggest challenge for The Boring Company will be to find a way to reduce these costs by improving the technology used in the process. In his interview with TED, Musk used the image of a snail which is 14 times more effective than a tunneling machine, he said. However, Musk’s project is starting to look more and more alive as the state of Maryland has issued a conditional utility permit to allow the firm to dig a 16-km tunnel near the city of Baltimore. This permit comes in addition to the first one already granted by the state of California for a 3-kilometre tunnel starting from the SpaceX headquarter in Hawthorn in August.
If this new market lives on the long term, the competition for any other form of transportation would be huge. Some other companies have tried to achieve something around the hyperloop concept after Musk mentioned it, and big names are already investing in it. Sir Richard Branson announced in October that the Virgin Group would invest in the startup Hyperloop One to rebrand the company as Virgin Hyperloop One and make the British investor join its board, “This is an incredibly innovative and exciting new way to move people and things at airline speeds on the ground” he wrote. Hyperloop even reached the speed of 192 mph (306 km/h) on a distance of 436 meters. Last month, after raising around $50m in Dubai, Hyperloop One announced that the city could be the frontrunner to be home of the first operating system of this transportation which would allow people to travel to Abu Dhabi in 12 minutes or Riyadh in 48 minutes. The final goal for Musk is to build tunnels connecting every big city in the US – and further – and create a whole new super-speed transportation system, without traffic issues. As Ashlee Vance said in her book about the man: “Because of Musk, Americans could wake up in ten years with the most modern highway in the world, a transit system run by thousands of solar-powered charging stations and traversed by electric cars. By that time, SpaceX may well be sending up rockets every day, taking people and things to dozens of habitats and making preparation for longer treks on Mars.” “Dreams” some would say… let’s see in ten years.
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Written by Tim Rouger │Independent Stock Analyst
Edited by Vee Venski
This article is not a promotion of financial investment. Investing money in financial instruments is risk-reward process. Losses and gains are part of financial investment process. Only invest money you can afford to lose.