Technological innovation has had profound effects on individual and commercial transportation. Fundamentally, there exist four conventional modes of transportation: railways, road, water, and air. But despite technological progress, modes of transportation continue to be relatively slow, expensive, or both. In response to California’s proposed high speed rail, entrepreneur Elon Musk has conceptualized an inexpensive alternative for travel between Los Angeles and San Francisco.

With past success in the industry, Musk has developed and introduced transcendent modes of transportation including SpaceX and Tesla Motors (TSLA). Offering a wide array of electric cars, Tesla has formed a niche market for designing and manufacturing luxury electric vehicles. With vehicles starting at $70,000, Tesla boasted a revenue of $3.2 billion in 2014.

Musk’s other project, SpaceX, designs and manufactures spacecrafts with the ultimate goal of enabling people to live on another planet. Following a recent contract with NASA, SpaceX was valued north of $10 billion. Clearly, with his keen eye for transforming transportation systems, Elon Musk’s proposed Hyperloop could achieve success.

The Basics of the Hyperloop

On the west coast, the strip between San Francisco and Los Angeles is one of the most traveled corridors. Currently, people can cover this distance by road, air, or railway. Roads and railways tend to be slow, while a flight, though fast, tends to be expensive. Musk’s proposed Hyperloop system would cover the distance between Los Angeles and San Francisco in 35 minutes and cost a mere $20 per ride.

The Hyperloop would consist of capsules transported at high speeds through the length of low pressure tubes that are elevated off the ground. To simplify the science, reports suggest the pods would work similar to an air hockey table. The capsules are supported on a cushion of air and travel at average speeds of 600 mph, reaching a top speed of 760 mph.

Economics

Undertaking a project like the proposed Hyperloop can be a large financial burden. It is already anticipated that the 350-mile trip between Los Angeles and San Francisco will cost $20 each way. However to build the extravagant tube system, Musk estimates it costs will be between $6 billion and $7.5 billion. His $6 billion estimate is for two one way tubes and 40 capsules with no cargo space, while the higher end of the estimate would carry cargo.

With tubes departing every 30 seconds and carrying 28 passengers each, a single tube would be able to transport 7.4 million people per year. By simple multiplication, the proposed two-tube structure could carry roughly 15 million people per year. At $20 per ride and an estimated 15 million trips per year, the Hyperloop would have the potential to gross $300 million in annual revenue.

A majority of the costs associated with putting the Hyperloop into production are driven by the construction of each tube. With an approximately 380 miles separating the two cities, the tube is estimated to cost $5.4 billion. A majority of the $5.4 billion can be broken down into construction, solar panels, batteries, permits, and land. The remaining $560 million would cover the costs of constructing 40 capsules. As the Hyperloop moves closer toward becoming a reality, an agreement has allowed the company to build a five-mile test strip with construction costs expected to reach $100 million.

California High Speed Rail

Delayed for the past few years, California recently broke ground on one the largest high speed railway systems. Designed to travel between Los Angeles and San Francisco, the costs of construction are estimated at $68 billion. Travel time between the two cities is expected to be 2 hours and 38 minutes with speeds over 200 mph.

The high speed rail is significantly faster than traveling by car but still slower than traveling by plane. An average ticket will cost $80 to $90. Besides its economic impacts, the California High Speed Rail is expected to reduce the amount of vehicular miles traveled, improve air quality, and reduce greenhouse gases. Unfortunately, the project is currently 50% below the necessary funds for completion by 2028. Assuming all estimates are correct, the costs of the California High Speed Rail make the project a greater financial burden than the Hyperloop.

Criticism

Criticism of Musk’s Hyperloop comes from doubts about the technology and the project's economics. In Musk’s proposal, he estimates the total cost of the project to be roughly $6 billion. Many believe the expected costs are drastically underestimated with the entire project forecasted closer to $100 billion. Despite its optimistic construction costs, the proposed individual fares of $20 per person have also been criticized as impossible. Finally, compared to the California High Speed Rail estimated costs of $68 billion, the Hyperloop’s proposed price tag of $6 billion is dubious.

Costs aside, the technical aspects of the Hyperloop have raised doubts. Speeds over 700 mph would surpass any commercial mode of transportation currently available. These extreme speeds would subject passengers to uncomfortable and frightening forces rendering the system unrideable. What's more, the Hyperloop is capable of carrying just 3,360 passengers each hour (if they can withstand the g-forces). Comparatively, a freeway lane can carry 2,000 cars per hour, a subway transports 36,000 passengers per hour, and the California High Speed Rail is estimated to carry 12,000 passengers per hour. Despite any apparent doubts and pitfalls, though, Elon Musk’s history of innovation adds credibility to the question of whether or not Hyperloop can succeed.

The Bottom Line

As stated above, there exist four modes of transportation; car, air, rail, and water. With the Hyperloop, Elon Musk envisions a tube-based transportation system that will transcend these categories, creating a fifth mode of transport. Musk’s past success with Tesla and SpaceX lend credibility to his outlandish proposal in the face of many doubts. The Hyperloop is expected to cost one-tenth the amount of California High Speed Rail and provide even faster times. Whether or not it can be fully implemented, technological innovation is pushing future travel towards efficiency and speed.

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