Leaked documents from Hyperloop One show the high cost of attempting to build transportation infrastructure from scratch.
When Elon Musk conceived of the Hyperloop high-speed transport system in 2013, he estimated that a route from Los Angeles to the Bay Area would cost about $6 billion, or $11.5 million per mile.
But leaked documents obtained by Forbes show that Hyperloop One — one of two companies attempting to make Musk’s idea a reality — is estimating the cost of a potential 107-mile Bay Area project to be somewhere between $9 billion and $13 billion, or $84 million to $121 million per mile.
The route between Abu Dhabi and Dubai, which the company recently announced ahead of a new $50 million round of funding, would cost $4.8 billion, or $52 million a mile.
That’s a huge departure from the cost of Musk’s original vision. It’s also a huge difference in cost between markets.
As with any transportation system, there are a number of variables from location to location — things like land acquisition costs, the need to tunnel (in Dubai, the company plans to have underwater tubes) and the number of stations along the route.
So it stands to reason that the price of building the Hyperloop would be different from market to market and that the costs would vary from Musk’s estimate.
But it’s unclear why the disparity is so great.
Musk’s original equation — based on the San Francisco to Los Angeles route — takes into account the cost of tunneling and building stations and pumps, as well as the costs of getting permits and buying land.
Hyperloop One chose not to comment, so there’s no clear picture of why its cost estimates are higher, beyond the fact that different routes are, well, different. Much of the technology that is needed already exists today.
“We are not waiting for new technology like carbon nanofibers or anything in order to do this. We have everything we need to do it, and it’s a matter of doing it in the best possible way,” Jakob Lange, a partner at Hyperloop One partner Bjarke Ingels Group, said in a video the company recently published.
— HyperloopOne (@HyperloopOne) October 24, 2016
Still, the costs are far lower than the expected price of building California’s high-speed rail system — which Musk’s Hyperloop blueprint criticized. The bullet train, which Musk described as “both one of the most expensive per mile and one of the slowest in the world,” has been projected to cost close to $68 billion.
It’s also not easy to build a completely new type of transportation infrastructure from scratch. It takes, among other things, a lot of engineering talent and a close collaboration between public and private sectors.
Another factor weighing on Hyperloop One is its executive leadership. The company recently ousted its co-founder and former chief technology officer Brogan BamBrogan, who faulted the tension between the engineering talent and the executives in a letter to CEO Rob Lloyd and Executive Chairman Shervin Pishevar.
Part of the letter read:
From the very beginning, the company culture built by our engineering leaders has attracted the brightest minds to build a singular company to deliver on the promise of Hyperloop. But there is a problem: this stellar company and its team feel that our work is severely undervalued and that our principles are not matched by certain members of the Board.
The letter, which was signed by a number of staffers, including the company’s current president of engineering, Josh Geigel, stemmed from a bitter and public series of lawsuits between BamBrogan and a few others who had either left or been fired at the company.
In response to BamBrogan’s suit against the company, Hyperloop One representatives disputed most of the claims and said that BamBrogan was merely attempting to take over control of the company.
Whether internal strife is at the root of of the differences between Musk’s price estimates and Hyperloop One’s, it is a reminder that constructing an entirely new transportation framework that shoots humans from one city to another at 700 mph is a costly and often complicated endeavor that requires much more than just a steady flow of venture capital money.