Despite all odds, Hyperloop One just raised another $85 million

Hyperloop One, a three-year-old, L.A.-based company working to create near-supersonic trains that can whisk both passengers and cargo in giant pneumatic tubes at speeds of many hundreds of miles per hour, has raised $85 million in fresh funding.

The round, which comes from DP World, Caspian VC Partners, WTI and OurCrowd.com, brings the company’s total funding to $245 million.

It’s a lot of money for what still seems like a pipe dream, no pun intended. As the Verge noted in its own report on the new round, Hyperloop One still has “no commercial product, no revenue stream, no government approval, and no proof that its ultrafast transit system would even be safe for human passengers.”

Though the company has proudly touted its proof of concept — in late July, in the Nevada desert, it shot a 28-foot-long pod made of aluminum and carbon fiber down a 1,600-foot-long concrete tube at 192 miles per hour in five seconds, then immediately sent footage of the feat to numerous media outlets — its challenges are numerous and well-documented.

Among them: any route would need to be straight and level. Meanwhile, land is expensive; presumably not all landowners would welcome hosting a hyperloop in their backyard. It could take tens of billions of dollars and decades to build. You get the idea. Hyperloop has also talked up its partnerships with governments around the world, though these are, for now, merely feasibility studies.

Apparently, such obstacles haven’t diminished the enthusiasm of the company’s newest investors, whose new round of funding reportedly values Hyperloop One at $700 million.

Still, it may grow harder for people to maintain their enthusiasm in its expensive approach, given that the idea’s earliest advocate, Elon Musk, has himself moved on to a project that he thinks will be less costly, more practical and will require less time: tunneling underground.

Indeed, earlier this week at TechCrunch’s Disrupt event in San Francisco, we talked about Musk with venture capitalist Steve Jurvetson, an investor in and director on the boards of two other Musk-led companies — SpaceX and Tesla. He suggested that building smaller, short-range tunnels for electric vehicle transport, which is what Musk is setting out to do with a new company, The Boring Company, makes more sense in the short term, and that the smaller, more cost-efficient tunnels he wants to build could eventually supplant the idea of a hyperloop.

“I personally love the idea [of The Boring Company], in fact, even more than the hyperloop idea, of digging these tunnels,” Jurvetson said.

“The insight I think that’s so powerful is that if you only envision electric vehicles in your tunnels, you don’t need to do the air handling for all carbon monoxide, carbon dioxide, you know, basically pollutants for exhaust. You could have scrubbers and a variety of simpler things that make everything collapse to a smaller tunnel size, which dramatically lowers the cost … The whole concept of what you do with tunnels changes.”

The “[land] right of ways, which was a killer to hyperloop as a concept, well, [tunneling is] potentially solving that problem, too.”

The Boring Company confirmed in a statement to Wired last month that it sees moving electric cars as a starting point, but that it plans also to develop its own hyperloop technology.

“At the Boring Company, we plan to build low-cost, fast-to-dig tunnels that will house new high-speed transportation systems,” the spokesperson wrote in a statement to Wired. “Most will be standard pressurized tunnels with electric skates going 125+ mph. For long-distance routes in straight lines, such as NY to DC, it will make sense to use pressurized pods in a depressurized tunnel to allow speeds up to approximately 600+ mph (aka Hyperloop).”

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Job No. 1 for Next Governor? NJ’s Transportation Infrastructure

High-level policy recommendations, priorities, and projects all part of report prepared for Christie’s successor.

Of all the major challenges facing the state’s next governor, New Jersey’s aging and often unreliable transportation system may be the most urgent and difficult one to deal with.

But a new report released by the Fund for New Jersey — with the endorsement of a former governor — offers a series of detailed transportation-policy recommendations for Gov. Chris Christie’s successor, while also making the argument that nothing less than the health of the state economy is at stake if New Jersey can’t figure out a way to maintain first-class infrastructure.

“I would argue it is the key to economic prosperity in New Jersey, and economic prosperity is the key to everything else in New Jersey,” said former Gov. Jim Florio, a member of the Fund for New Jersey’s board of trustees, during a news conference in Trenton yesterday.

Among the tough-medicine recommendations made in the report is a call for carving out of revenue from state driver’s license and registration fees to better support transportation investment, as well as possibly increasing those fees to help the state wean itself off ongoing fund diversions from capital accounts and the New Jersey Turnpike Authority.

The report also recommends consolidating state highway agencies within the Department of Transportation to make them more efficient and to reduce overall cost. And it also revisits the notion of letting a private company operate state toll roads in exchange for upfront cash, an idea that was famously unpopular with New Jersey residents when floated by former Gov. Jon Corzine a decade ago.

The report is the fourth in a Crossroads NJ series that the nonpartisan Fund for New Jersey has been rolling out during the 2017 election year, which will see both the governor’s office and all 120 state legislative seats up for grabs in November. Officials from the fund, a philanthropic organization that encourages informed policymaking (and is a funder of NJ Spotlight), say their goal is to inject into this year’s public debate a set of serious proposals, though they acknowledge their ideas aren’t the only options that should be on the table.
‘Being honest with the people’

“It’s time now for leaders to start being honest with the people,” said Florio, who served as New Jersey’s governor from 1990 to 1994.

“No alternative that you offer is particularly pleasant (and) all of the alternatives are problematic,” Florio said. “But leadership entails being able to offer people options, alternatives, and then make decisions on the basis of what is least offensive or the most advantageous.”

The report on the transportation issue comes out at a particularly critical time, with ongoing questions being raised about the financing of the state’s most significant transportation project, a new trans-Hudson rail tunnel. New Jersey Transit has also been the subject of ongoing legislative hearings in the wake of a fatal crash in Hoboken last year, with the most recent hearing delving into concerns about management, finances, and patronage that were leveled by a former agency compliance officer, accusations that were strongly disputed by NJ Transit in a subsequent lawsuit.
Not up to blue-ribbon standards

And despite recent NJ Transit fare increases and a politically unpopular 23-cent gas-tax hike that was imposed on motorists just last year as part of a reauthorization of the New Jersey Transportation Trust Fund, the state’s annual investment in transportation is still falling nearly $1 billion short of the amount identified in a blue-ribbon commission report on transportation infrastructure that was drafted more than a decade ago.

“The political dimensions of this subject are really important – and they’re difficult,” said Martin Robins, director emeritus of Rutgers University’s Alan M. Voorhees Transportation Center, as he presented the report along with Florio yesterday.
Setting priorities

At the top of the report’s priority list is likely the toughest transportation issue facing the state: where funding for the nearly $30 billion Gateway infrastructure project that includes the new trans-Hudson rail tunnel will come from. Christie, a Republican, canceled a prior tunnel project during his first-term in office, and now it’s unclear whether President Donald Trump’s administration will honor a cost-sharing plan for Gateway that was drafted during the tenure of former President Barack Obama. That plan called for the federal government to pick up half the cost of Gateway, which includes several other infrastructure improvements in addition to a new tunnel, with the balance to be covered by New Jersey, New York, and the Port Authority.

The century-old rail tunnel that’s currently used by NJ Transit was seriously damaged by Superstorm Sandy, and both its inbound and outbound tubes are in need of repair. If just one of the tunnel’s tubes were to go out of service before a new tunnel is up and running, the number of hourly trips into New York would be reduced from 24 to six, the report warns.

“There is an urgency of incomparable nature that this project proceeds,” Robins said.

The report makes a similar call for urgency to support the state’s bus commuters as the Port Authority continues to move slowly on a project to replace its flagship bus terminal in midtown Manhattan. The agency’s latest long-term capital plan included only partial funding for a new bus terminal even as ridership is expected to increase by as much as 50 percent by 2040. And while not every resident of the state commutes into New York or even uses the mass-transit system, both Robins and Florio argued that all residents have a stake in maintaining the infrastructure because those jobs support the local economies in communities across the state.

“The real-estate market, which is a vital part of New Jersey’s suburban economy, is tremendously undergirded by the quality of public transportation and the accessibility of those municipalities to New York City,” Robins said.

The report, meanwhile, also devotes a lot of attention to New Jersey’s major highways and rail network. Among other things, it cites concerns about the roughly $200 million in annual revenue that is being diverted from the toll-dependent New Jersey Turnpike Authority to help sustain NJ Transit. That agency’s annual subsidy in recent years has been held flat or even reduced. The report also highlights an ongoing diversion of NJ Transit capital funds for operating expenses that has occurred for decades under governors from both parties.

“Restoring this money to its intended use would strengthen a NJ Transit capital budget that remains fragile and insufficient even after the 2016 (TTF reauthorization),” the report says.

The report also suggests earmarking excess revenue from the New Jersey Motor Vehicle Commission, which every year sends millions of dollars into the state’s general fund after covering its own expenses. Charging tolls on interstate highways in New Jersey and generating new tax revenue from real-estate transactions or businesses, which is something the New York Metropolitan Transit Authority has been doing, was also put up for consideration.

Some of the recommendations echo policies that have been proposed by the gubernatorial candidates. For example, Democrat Phil Murphy has called for the creation of a dedicated source of revenue for NJ Transit, and both Murphy and Republican Kim Guadagno are emphasizing the Gateway initiative and the bus-terminal project as part of their transportation platforms.

But officials from the Fund for New Jersey said their report and its recommendations are not intended to favor one candidate or another. And they also hope the conversation on transportation policy will go beyond this year’s election season.

“The day after the election, these issues don’t stop being issues,” said Kiki Jamieson, the fund’s president.

New Jersey Spotlight via California Rail News