California’s Transportation Future – The Hyperloop Option

In July 2012, Elon Musk sat down for a “fireside chat” with Sara Lacy, founder of the PandoDaily website. In between discussions of PayPal, Tesla and SpaceX, 43 minutes in, Musk unveiled his idea for the “Hyperloop,” a new transportation technology that “incorporates reduced-pressure tubes in which pressurized capsules ride on air bearings driven by linear induction motors and air compressors.”

The concept wasn’t new. Hyperloop concepts have existed for nearly 200 years. Small scale “pneumatic railways” were actually built in Dublin, London, and Paris, mostly as a novelty, as far back as the 1850s. In 1910, American rocket pioneer Robert Goddard proposed a train that would go from Boston to New York in 12 minutes. Goddard’s design advanced the technology, replacing wheels with magnetic levitation of the passenger capsule inside a vacuum-sealed tunnel.

Musk’s “Hyperloop Alpha” study was released by a joint team from SpaceX and Tesla in August 2013. This 58 page study remains an excellent investigation of the financial and engineering feasibility of Hyperloop technology. The concept is relatively simple. Passengers and freight travel in “pods” or “capsules,” through a tube that has had all the air pumped out, eliminating the friction of air resistance. Moreover, these pods ride on electromagnets, repelled away from the inner surface of the tube, eliminating the friction of wheels. Not only would these electromagnets keep the pods levitated off the inside surfaces of the travel tube, but through “linear induction,” they would provide the force to propel the pod through the tube. Most proponents claim these innovations make speeds feasible in excess of 700 MPH.

A system like this, assuming there were nonstop service, could deliver passengers from San Francisco to Los Angeles in around 30 minutes. From the Hyperloop Alpha report, here is the route a Hyperloop system could take in California:

“Hyperloop Alpha” – The Original Proposed Route Connecting SF to LA

Hyperloop alpha

The Hyperloop Alpha study was released as an open source document, and none of the companies currently developing Hyperloop systems are directly affiliated with Musk or his companies. Since 2013, at least three noteworthy companies have emerged. Each of these companies have developed substantial technical changes to the design imagined in Musk’s Hyperloop Alpha study. And sadly, despite two of them being headquartered in California, none of these companies are currently proposing a system to connect San Francisco to Los Angeles.

THE MAJOR HYPERLOOP CONTENDERS

Virgin Hyperloop One, founded in 2014, is based in Los Angeles. They have over 300 employees and have raised over $295 million in investment capital. The company was rebranded in October 2017 after receiving a significant investment from Virgin Group founder Richard Branson. In May 2017 they began testing a Hyperloop system on a 500 meter “development loop” built in the desert north of Las Vegas. Regarding next steps for the company, a spokesperson for Virgin Hyperloop One claimed “we’ve already seen ground-breaking commitments in India, UAE, Saudi Arabia and the U.S.” He said construction of the Mumbai-Pune route in India could begin as early as 2022 and be completed in less than five years for passenger operations.

Virgin Hyperloop One’s 500 meter long “DevLoop” in the Nevada Desert

Virgin Hyperloop

Hyperloop Transportation Technologies, or “HTT,” founded in late 2013, is based in Culver City in the Los Angeles area. They claim to have over 800 collaborators located all over the world who are working mostly in exchange for stock options.  While HTT uses crowd sourcing and is crowd funded, they have developed proprietary technology. An HTT spokesperson reached for comment said “The model is tricky to define. It isn’t open source, we call it ‘open collaboration.’ We don’t disclose our patents and schematics, we have signed contracts and non-disclosure agreements. But this way qualified candidates can be found worldwide and can contribute their talents in exchange for stock options.”

A Harvard Business School case study on HTT had this to say about the company’s prospects using this business model: “Rather than employees, HTT has invited over 800 people to contribute a minimum of 10 hours per week in exchange for future equity. Everything from recruitment, incentives, culture, technology, and intellectual property controls are handled with the idea that a community can work together to solve a global problem (transportation) by ‘turning a collective passion into a vision and the vision into a reality.’ The open question is how this approach will fair as the organization moves from design to delivery.”

Apparently so far HTT’s novel approach to financing and recruitment is working, because in April 2018 they announced construction of a kilometer-long test track near its R&D center in France near Toulouse. In addition to being headquartered in California with a test track underway in France, HTT has entered into government partnerships to perform feasibility studies and testing in Slovakia, India, as well as in the U.S. states of Ohio and Illinois. HTT also has impressive commercial technology partners including AECOMAnsys, and Oerlikon.

Hyperloop Transportation Technology’s full-scale tubes are transported to French test site 

Hyperloop

Another entrant in the Hyperloop industry is Transpod, founded in 2015, based in Toronto with satellite offices in Italy and France. In 2018 they announced plans to build a half-scale, 3 kilometer test track in France. Transpod president Sebastien Gendron, reached by phone, said construction would start this summer. He expected it to be ready for tests to begin within a year, or by Spring of 2019. He stated the decision to go at half-scale was based on a need to finalize the technology based on the results of the testing.

The designs Transpod are exploring are illustrative of the variations in the engineering solutions being developed at these three main competitors. Gendron explained that to reduce the cost per kilometer of tube, a major factor is the type of magnetic levitation. “We are developing technology to keep 80-90% of the levitation system on the vehicle itself,” he said. This would eliminate the need for expensive permanent magnets powered up for the entire length of the corridor. Like his counterparts at Virgin One Hyperloop and HTT, Gendron was reluctant to explain further details of their proprietary technology.

Hypothetical Hyperloop Station (artists rendering from Transpod)

Hypothetical Hyperloop

WILL HYPERLOOP WORK AND IS IT SAFE?

A rather caustic attempt to debunk Hyperloop technology was released in July 2016 by Phil Mason, a British scientist and videoblogger who has nearly 800,000 subscribers to his YouTube channel. His video, entitled “The Hyperloop Busted!,” has gotten over 1.5 million views, and takes a dim view of Hyperloop technology. Some of Mason’s criticisms are valid but obvious, and not deal killers. In particular, that Hyperloop systems will cost more than claimed by proponents, and that Hyperloop systems will use more energy than claimed by proponents. Mason is almost certainly correct in these criticisms, but they don’t necessarily kill the argument for Hyperloop transportation solutions. How much more will they cost? How much more energy will they consume? Other concerns merit more attention.

For example, Mason claims that current designs for lengthy Hyperloop routes don’t take into account thermal expansion of metal tubes that are literally hundreds of miles long. When reached for comment on this challenge, a Hyperloop One spokesperson said “We have successfully built a test track in the Nevada desert which is the perfect environment to test the impact of temperature changes upon the Hyperloop tube as temperatures range from over 100F to below freezing. The DevLoop tube experiences daily movement due to expansion and contraction of the steel during temperature swings. To accommodate this movement, we have designed proprietary structural systems into the DevLoop columns to allow for this movement which allows the tube to expand and contract without causing structural damage to the tube, vacuum, and other supporting mechanisms. As systems get longer, we are confident that we can build a flexible, strong, affordable, safe system that can endure a multitude of weather conditions given our testing experience in the harsh climate of the Nevada desert.”

Until systems get longer, it is difficult for Hyperloop proponents to muster convincing arguments that it will be absolutely safe. Depressurizing a tube several hundred miles long is a major engineering feat requiring a lot of energy, as is constructing a tube that long that is capable of structurally withstanding depressurization. There are many unanswered questions.

How will passenger pods exit the main Hyperloop route and switch onto sidings to board and disembark passengers at intermediate stops? How will pods airlock themselves to exit points at the station without letting air into the tube? Since these pods will be traveling at very high speeds, packing almost unimaginable kinetic energy, how certain can operators be that a pod might never bump into the inside of the tube? Wouldn’t a minor “bump,” at high speed in a narrow tube, result in a catastrophic collision, rupturing and depressurizing the tube and likely killing not only the passengers in the colliding pod, but all the passengers in all the pods transiting the tube as they encounter a wall of air?

THE TUNNELING OPTION

One of the strongest arguments for Hyperloop systems, should they function as planned, is that implementing them uses less space. Hyperloop systems can be put onto pylons, elevating the tubes so they don’t disrupt activities on the ground below them, whether that is farmland or the median of a divided highway or freeway. Hyperloop tubes can also be buried underground, enabling them to establish routes through densely populated cities.

It may be that the first use of Hyperloop technology will be within urban areas, where the space advantage they offer constitutes a more decisive argument for investing in a system than the maximum speeds they might achieve on longer routes. It may be the technology can be perfected at lower, safer speeds. Elon Musk, who is not directly involved with any of the companies vying to build the first Hyperloop systems, has founded The Boring Company, where he hopes to apply the same aggressive innovation to tunneling technology as he has applied to rocketry with SpaceX.

If SpaceX challenges NASA in the field of rocketry, The Boring Company faces a similarly entrenched competitor in the German firm Herrenknecht AG. Founded in 1975, its massive factory nestled along the Rhine, this multi-billion dollar company sells tunneling systems – sophisticated snakelike machines that can be over 1,000 feet long – all over the world. Herrenknecht TBMs (tunnel boring machines) dug the 35 mile long Gotthard Base Tunnel under the Swiss Alps in 2009, the longest and deepest tunnel in the world. Today, most of Herrenknecht’s TBMs are digging subways in urban areas, primarily in the Middle East and Asia. For more on Herrenknecht and tunneling technology today, read “The Long Dig” (New Yorker, 2008), or watch this fascinating animation of an operating TBM.

Tunneling, like blasting payloads into low earth orbit, is extremely expensive. But The Boring Company claims tunneling costs can be dramatically reduced. On The Boring Company’s FAQ page, the following innovations are proposed: (1) Triple the power output of the TBM’s cutting unit, (2) Continuously tunnel instead of alternating between boring and installing supporting walls, (3) Automate the TBM, eliminating most human operators, (4) Go electric, and (5) Engage in tunneling R&D, “the construction industry is one of the only sectors in our economy that has not improved its productivity in the last 50 years.”

Apparently tunneling, whether for Hyperloop pods, or just electric powered “skates,” has the attention of the Los Angeles City Council, which in April 2018 approved a CEQA exemption so The Tunneling Company can immediately begin digging a 14 foot diameter, 2.7 mile long tunnel through the heart of West LA. The Boring Company believes they will complete this tunnel in 9 months. Don’t laugh. SpaceX is now routinely reusing first stage rocket boosters, an achievement that eluded NASA for decades. And imagine how long it would take LA Metro to complete the same project.

According to The Tunneling Company, tunneling using conventional methods costs about $1.0 billion per mile. But the current standard for a one-lane tunnel is approximately 28 feet. By placing vehicles on a stabilized electric skate, the diameter can be reduced to less than 14 feet. The area of a 14 foot diameter circle is 615 square feet, whereas a 28 foot diameter circle has an area of 2,463 square feet, exactly four times as much. If Musk is correct that a 14 foot tunnel – which just happens to be the diameter of the tunnel he’s been approved to dig in Los Angeles – is a viable size for mass transit, he’s just brought costs down by 75%. If other proposed innovations are successful, The Boring Company may reduce tunnel costs from $1.0 billion per mile per lane to $100 million per mile per lane. As shown in this animation, electric “skates” can carry cars through these tunnels at speeds of 120 MPH, using elevators to move them down to the tunnel and back up to the roads.

THE FUTURE OF HYPERLOOP TECHNOLOGY

The pace of innovation clearly makes a case that California’s high speed rail project could end up being obsolete before it’s even completed, at staggering expense. But can the same be said for the Hyperloop? What are the emerging competitors to Hyperloop?

Within urban areas, where transportation challenges remain most acute, tunnels underground don’t have to move people at 700 MPH through zero PSI to constitute breakthrough improvement. They can use proven, much safer technology, such as electronic skates that transport cars through tunnels at normal air pressure. Traveling from the San Fernando Valley to downtown Los Angeles takes about 15 minutes if you’re going 120 MPH. You don’t need to go faster.

Between urban areas, there is a clear case for Hyperloop as a superior competitor to high speed rail. Assuming the safety issues and remaining technical challenges can be overcome, it is probably cheaper to construct, and it’s much faster. But these are big ifs. And even if Hyperloop can compete with high speed rail, that’s a low bar. What about conventional air travel? Can Hyperloop construct a network of zero PSI tunnels that connect every major city in California, the way, for example, Southwest Airlines does today?

And at what point does Hyperloop itself become obsolete, unable to cost-effectively compete with new innovations? When the energy density of batteries descends to under 400 watt-hours per kilogram (the best are currently already packing about 300 watt-hours per kilogram), high-speed electric planes become feasible. Because these planes would not have air-breathing jet engines, they could ascend to 60,000 feet where the thinner air offers less resistance, allowing them to travel at supersonic speeds using less energy. And because these planes could be designed like the V-12 Osprey, with rotating engine nacelles, they could take off and land vertically, eliminating the need for airport runways.

One big problem with Hyperloop, ultimately, is same problem with any rail transport. You can only go where the rails – or tubes – go. And only very specialized vehicles can go onto these rails, or into these tubes. Roads, on the other hand, can accommodate anything with wheels. The air, an even more versatile transportation medium, can accommodate anything that flies.

The next article in this series will examine advances in small scale transportation innovations. Advanced vehicles designed for roads and for flight. These new technologies will deliver passengers and freight at high speeds, with ranges that reach from the fringes to the center of large urban areas. It may be that embedded rail or tunnel technologies only make sense in the most densely packed urban cores, or along heavily traveled transportation corridors.

It makes sense to come up with high speed options to connect California’s North Central Valley to the Silicon Valley, or to connect California’s South Central Valley to the Los Angeles Basin. To connect the Silicon Valley to Los Angeles does not make sense for high speed rail, because it doesn’t go fast enough to compete with jets. Whether or not Hyperloop technology provides any of these solutions depends on whether it can indeed reduce the costs significantly below high speed rail, at the same time as it delivers safer, much faster transportation than high speed rail. It also depends on what other high-tech transportation solutions are on the way, using those most versatile of all transportation technologies, wheels and wings.

*   *   *

This article is the 2nd in a series on California’s transportation future. The first installment was “California’s Transportation Future, Part One – The Fatally Flawed Centerpiece,” published in April 2018. Edward Ring co-founded the California Policy Center in 2010 and served as its president through 2016. He is a prolific writer on the topics of political reform and sustainable economic development.

Will California be the first state to tax space launches?

spaceX launchOne of the world’s leading experts on the commercialization of space questions the California Franchise Tax Board’s move to make the Golden State the first to impose state taxes on private space launch and tourism firms.

John Logsdon, co-founder of George Washington University’s Space Policy Institute, told the San Francisco Chronicle that the commercial launch business was heating up, with private “spaceports” as well as leased military facilities being use to send cargo and – before long – tourists in the state.

The $2 billion in revenue that launch firms generated in 2014 worldwide is expected to continue to grow and make it a lucrative niche industry. Elon Musk’s Hawthorne-based SpaceX company is one of the world’s best-known space firms; a recent launch is pictured above. Vandenberg Air Force Base on the Santa Barbara County coast is considered a superior launch facility.

Against this backdrop, Logsdon questioned why California would seek to lead on space taxation: “States that don’t levy taxes would have that competitive advantage over states that do. If California puts in a tax and Florida or Texas doesn’t have a similar tax, I’m not sure that helps California in a competitive way.”

But Thomas Lo Grossman, the Franchise Tax Board official interviewed by the Chronicle, contended that the tax regulatory framework would actually make private launch firms more comfortable being based in California.

As a recent Quartz.com analysis noted, the state framework is what space companies prefer as the overall basis for taxation and hope it is copied by governments around the world.

“The complicated new formula … sets a tax rate based on how often rockets are flown from California. It uses the 62-mile trip to space as a standard, and reduces the levy on revenue earned in launches from other sites,” wrote space business reporter Tim Fernholz. “The new rules, based on formulae used for terrestrial transport industries, appear to ensure that a California-based company like SpaceX won’t be excessively taxed for revenue generated by launches in other states, while Colorado-based ULA pays its fair share for using California spaceports.”

Florida has already lured away California space venture firm

But unlike Quartz, the Chronicle report addressed Logsdon’s point about the business-friendliness of California becoming the first to levy a state tax in a nation in which a half-dozen states already have launch sites and many more are interested in building them. It noted that Moon Express – a well-financed venture capital firm that hopes to mine the moon for valuable natural resources – had relocated from Mountain View in the Bay Area to Florida. Company CEO/founder Bob Richards cited incentives proved by Space Florida, the state’s ambitious space economic development program.

California’s state efforts to promote space economic development are based with the Office of Strategic Technology in Los Angeles County – but space is only one industry the office seeks to help, unlike Florida’s more specific approach. Project California’s Council on Science and Technology also does some related work.

The Franchise Tax Board will consider adopting the rules after a public hearing on June 16. The board is taking comments on the FTB proposal until June 5.

This piece was originally published by CalWatchdog.com

Boycott the Oscars? Why Not Boycott Everything!?

oscarsThe focus of the political world will be on California Sunday when several political speeches are bound to take over the Oscars. According to one account, the Oscars broadcast, which lost viewers last year, could rebound over the expectation of hearing these political speeches. Or there could be a boycott of the broadcast in anticipation of speeches blasting President Donald Trump.

That would be in line with the current political strategy that seems to be capturing activists of all political stripes in this divided country: Boycott everything!

When Under Armour CEO Kevin Plank praised Trump’s business agenda, social media exploded with a hashtag to boycott the company.

With Elon Musk agreeing to serve on Trump’s business advisory committee, customers reportedly canceled auto orders.

Boycott campaigns were aimed at retailers such as New Balance, Macy’s and L.L. Bean because company officials said kind words about Trump’s business or trade policies.

Of course, there was the blowup over Nordstrom’s dumping Ivanka Trump’s fashion line which saw counter campaigns to either support or boycott Nordstrom’s over its decision.

The boycott strategy could also find itself in state law if Senator Ricardo Lara gets his way. Lara’s Senate Bill 30 would prohibit the state government from doing business with any individual or organization that assists in construction of a federal border wall along the California-Mexico border. Consider this a state sanctioned boycott.

I’ve tackled the issue of boycott before: In the free speech universe, boycotts themselves are a form of free speech, an individual expressing an opinion by choosing not to buy (or the obverse — to buy to support a business’ decision). On the other hand, boycotts can have a chilling effect on free speech by discouraging expression by business owners and others.

Of course, California business is not unfamiliar with boycotts. The boycott against grape growers organized by the United Farm Workers is well remembered. More recently, some Southern Baptists organized a boycott against Disney.

Boycotts to make political points have been encouraged by Martin Luther King, Mahatma Gandhi and President Jimmy Carter during the 1980 Moscow Olympics. A petition signed by supposedly 700,000 people called for a boycott against Target stores after the retailer announced transgender people are welcome to use the restrooms that they identify with the most.

What if all these boycotts were successful beyond the imaginings of their supporters? Some businesses would be shut down. Some voices would lack an audience.

But a major goal of boycotts is shut off debate and that is a dangerous thing. Our great civic divide would deepen because people are not talking to each other.

I still believe in the marketplace of ideas. Discerning good ideas from bad takes debate and discussion. Cutting off and threatening to cut off people or institutions that want to voice their opinion ill serves democracy.

ditor of Fox & Hounds and President of the Small Business Action Committee.

This piece was originally published by Fox and Hounds Daily

Elon Musk’s Tunnel to Nowhere

los-angeles-freewaysElon Musk is tired of Los Angeles traffic, so, he says, he’s going to build his own tunnel. The fact that anyone takes this statement seriously points up what’s wrong with the relationship between tech entrepreneurs and civic planners. Cities have problems, but the solutions require gradual fixes. The right approach isn’t radical revolt; it’s small-c conservatism.

Fifteen years ago, Musk made his fortune selling the PayPal money-transfer platform to eBay. He’s now busy with several other ventures. His Tesla electric-car company has plowed billions of investor dollars and government clean-energy tax credits into battery and automated-driving technology, contributing to the advancement of each. His SolarCity solar-panel manufacturing experiment in Buffalo, New York, on the other hand, depends entirely on a $750 million subsidy from Empire State taxpayers. Tesla and SolarCity merged last year. Musk’s commercial-space venture, SpaceX, suffered a severe setback last year when one of its rockets exploded, destroying a $200 million Facebook satellite.

That’s life as an entrepreneur. You win some; more often you lose some. Investors should be smart enough to know the risks. Musk’s tunnel project, though, isn’t a matter of experimenting with investor and taxpayer money. Instead, if taken literally, it’s civic anarchy. In December, Musk tweeted: “Traffic is driving me nuts. Am going to build a tunnel boring machine and just start digging . … I am actually going to do this.” Last week, he reported, “Exciting progress on the tunnel front. Plan to start digging in a month or so.” He said that he’d start near his office in Hawthorne, a city in Los Angeles County. Wired.com has reported that Musk is already experimenting on his company’s own property.

Whether you’re a billionaire, a Twitter crank, or both, there are several good reasons why you can’t build your own tunnel beneath broader Los Angeles. Musk may be trying to point out the idiocy of laws and regulations that make it hard to build infrastructure, but he’s actually doing the opposite: reminding us why we adopted our laws and regulations in the first place. Building a tunnel disrupts traffic above it. Who would be responsible for the years-long traffic diversions? Tunnels require entrance-and-exit points. If Musk plans a tunnel for cars, not trains, how would smaller surface roads handle all the traffic going into and coming out of a fast-moving underground thoroughfare? If he plans a tunnel for trains, where will people enter and exit above ground, and how will the city keep all these new pedestrians safe from traffic? What if Musk miscalculates his tunnel’s ability to withstand an earthquake, as his staff miscalculated the safety of his rocket? It’s OK to blow up your own (and your customers’) equipment. It’s not OK to take the same risks with a city.

Extra road capacity often attracts more drivers. Despite the recent widening of L.A.’s 405 freeway, “congestion is as bad — even worse — during the busiest rush hours,” the New York Times reported last month. The way to reduce road congestion in the long term is to do what Los Angeles has been doing for nearly 30 years: build subways and light rail. Musk himself tweeted recently that Los Angeles’s subway is “lame, but getting better.”

Finally, if Musk can build a tunnel from his office to wherever he wants to go, why couldn’t every Angeleno with some money and an ego try the same? We live in a democracy, and democratic processes — particularly local ones — are important. Los Angeles residents may want a new tunnel built, or they may not. They may prefer a different tunnel to the one Musk proposes. They may prefer to live more densely than they do already, meaning more rail, or less densely, meaning more road construction. But the people do — and should — have a say.

USA Today reporter Nathan Bomey took Musk’s tunnel tweets seriously, noting that the entrepreneur is “one of the few people who is just rich, powerful and inventive enough to actually do something about the legendary traffic congestion in Los Angeles.” This is misplaced enthusiasm. Elon Musk may be a dreamer, but surely he realizes tunneling beneath Los Angeles without permission would get him arrested — and rightly so.

Tech entrepreneurs would do better to help improve government rather than bypass it. It takes too long, and is too expensive, to build any kind of infrastructure. City planners and private-sector contractors could benefit from outside review of their work processes; automating repetitive construction work, for example, could cut costs. Unfortunately, the tech industry hasn’t shown much expertise at this in the past. Tech billionaire Michael Bloomberg was a good mayor, but he didn’t cut New York City’s personnel costs during his tenure; in fact, such costs grew significantly. Nor did he make the city operate more efficiently or build its large-scale physical infrastructure more efficiently.

Running a tech business is not the same as running a government, and it never will be. Depending on a single heroic billionaire to rescue you from the result of city-planning decisions made by millions of people over many years is the wrong way to go about basic governance.

Tesla: 1st Profit in Years, Thanks to California Climate Credits

telsa-elon-muskTesla Motors Inc. (TSLA: NASDAQ) reported this week that revenue nearly doubled in the latest quarter. The all-electric car company reported its first quarterly profit in over three years, thanks to cashing in $139 million of California tax credits that are meant to help combat climate change.

The company reported net income of $21.9 million, or 14 cents per share, for the third quarter ended Sept. 30, the first positive net earnings since the winter quarter of 2013. The profit came despite Wall Street analysts expecting a $0.56 loss. The profit compared to a loss of $229.9 million, or $1.78 per share, for the same quarter last year.

Total revenue more than doubled, to $2.3 billion, and the company’s capital spending came in dramatically below what analysts had expected as Tesla ramped up its infrastructure to begin producing its $35,000 mass-market Model 3 sedan.

Chief Executive Elon Musk stunned analysts on the company’s earnings call by commenting that despite moving from a production plan to produce 90,000 vehicles this year to 500,000 vehicles in 2018, the company’s current plan “does not require any capital raise for the Model 3 at all.”

Breitbart News reported in June that despite Tesla never meeting any of its unit production targets in the last five years, CEO Elon Musk told shareholders that through the magic of “physics-first-principles” he would revolutionize auto industry efficiency by “factors of 10 or even 100 times” to improve production profitability by 1,100 percent. Six weeks later, Tesla reported a nasty loss, and Musk was scorned by the financial press.

Tesla had planned capital spending of $2.25 billion this year. But with only $800 million spent in the first three quarters, Musk expects $1.8 billion in capital expenditure this year.

All this good operating news comes during a quarter when Tesla was hammered by the external environment. The company has been battered by reports of a growing number of injuries, and the death of a Model S driver using Autopilot, the company’s semi-autonomous driving system. Musk is also trying to have Tesla shareholders acquire debt-laden SolarCity (SCTY.O), which he and a number of family members control.

Consumer Reports on October 20 trashed Tesla vehicles in the magazine’s annual review. Although the all-electric Model S sedan earned the equivalent of 84 miles-to-the-gallon in energy consumption, and high marks for driving dynamics, the company was blasted by 1,400 mostly terrible responses from owners that took part in the magazine’s Annual Reliability Survey. The only established brands that Tesla beat were Dodge, Chrysler, Fiat, and Ram.

Some analysts scoffed at Tesla for being profitable due to $139 million proceeds from sales of California zero emission vehicle tax credits. But rival automakers are buying the credits, and essentially taxing their own California customers to avoid selling electric cars.

Tesla stated that at September 30, the company had $3.08 billion in cash and equivalents, compared with $3.25 billion at the end of the second quarter. That was $250 million better than Breitbart News had expected the company to report.

Tesla’s shares initially spiked up by over 6.2 percent on the company’s profit release. But by mid-day trading on October 27, the stock had given back most of that gain.

This piece was originally published by Breitbart.com/California

Tesla Planning Aggressive California Expansion

teslaHigh-flying clean-energy industrialist Elon Musk has doubled down on his production plans in California. Tesla, his auto company, “took a major step toward its ambitious goal of one day building 1 million cars a year by seeking to double the size of its Fremont, Calif., assembly plant,” the Los Angeles Times reported. “Under a long-term zoning proposal submitted to Fremont’s Planning Commission, the electric car maker wants to eventually add 4.6 million square feet of space to its factory’s existing 4.5 million square feet.”

Musk “told analysts this spring that the Palo Alto-based automaker hopes to ramp up annual production to 500,000 vehicles in 2018 and build 1 million vehicles by the end of 2020,” the paper added. “The 2018 goal alone is nearly a tenfold increase from the 50,580 vehicles that Tesla produced last year in Fremont. The automaker has forecast this year’s deliveries at 80,000 to 90,000. Quality problems and production delays plagued the plant early this year and threatened sales plans. But the company said last week that those problems are behind it and that it expects to come close to its forecast for 2016.”

Broad deals

Musk has not hesitated to link up with government resources and opportunities in order to advance his business interests. This month, he aligned SpaceX closely to take advantage of President Obama’s call to use private industry to help bring Americans to Mars. “Within the next two years, private companies will for the first time send astronauts to the International Space Station,” Obama announced. “One of those private companies tasked with ferrying astronauts to the ISS and who will essentially return human spaceflight to American soil in late 2018 is SpaceX,” the Observer noted.

And last month, Musk inked a deal to change the way California backstops its energy needs. “Tesla Motors Inc. will supply 20 megawatts (80 megawatt-hours) of energy storage to Southern California Edison as part of a wider effort to prevent blackouts by replacing fossil-fuel electricity generation with lithium-ion batteries,” Bloomberg reported. “Tesla’s contribution is enough to power about 2,500 homes for a full day, the company said in a blog post on Thursday. But the real significance of the deal is the speed with which lithium-ion battery packs are being deployed,” the site added — “months not years.”

Outracing critics

As Musk has accelerated his increasingly ambitious plans, however, he has attracted a greater share of criticism toward the mechanics of his business operations. “The pressure is now on Tesla for a smooth launch of the relatively affordable Model 3. A quality product pumped out at low cost and high volume is essential to meeting the ambitious goals of the company and its investors, auto analysts say, whereas long delays could threaten the company’s reputation — and survival,” according to the Times.

Meanwhile, wariness has centered separately around SolarCity, a startup run by family members. “The Tesla-SolarCity deal looks so bad on paper that many investors worry it’s simply a bailout of SolarCity, which Musk co-founded and continues to chair,” the MIT Technology Review noted. “While SolarCity dominates the market for leasing, installing, and maintaining solar panels for residences and businesses, it’s racked up more than $2 billion in losses over the past five years. “

“Its business model requires it to raise huge amounts of capital to cover the up-front costs of providing panels for no money down to consumers on multiyear contracts. Since its inception, the company has accumulated more than $3 billion in debt against just $1.5 billion in revenue. Now it is having a harder time convincing people to lend it money.”

What’s more, Musk has had to contend with a rebellion among his own shareholders. “As of earlier this week, seven Tesla stockholders have filed lawsuits against Elon Musk over the proposed acquisition of SolarCity and alleged Musk was in breach of his fiduciary duties for not disclosing the proposed merger properly. Some of these stockholders are asking the judge for an injunction to prevent the merger from going through,” Recode reported. But the two companies have announced the merger is going ahead anyway. “The companies have set the date for their respective shareholders to vote on the $2.6 billion all-stock transaction for Nov. 17.”

This piece was originally published by CalWatchdog.com

Hyperloop vs. High-Speed Rail

HyperloopWhen Elon Musk first proposed the hyperloop as a transportation alternative, he projected sealed tubes would hurl a pod between San Francisco and Los Angeles in 35 minutes. At the time, Musk’s vision was compared to the newly minted high-speed rail project that was projected to cover the same ground in 2.5 hours and be outmoded before it was finished.

Yesterday, in the Nevada desert the hyperloop had its first test. A sled rocketed from 0 to 60 miles per hour in 1.1 seconds propelled along a track by magnets for 300-plus yards. The company behind the test, Hyperloop One, was satisfied with the results. The Los Angeles based company is aiming to run a full-scale, full-speed hyperloop prototype through what is often described like a vacuum tube by the end of the year.

While the hyperloop system was projected by some as an alternative to high-speed rail, former California secretary of business, transportation and housing, Dale Bonner, told a Milken Institute Global Conference forum at the beginning of the month that both forms of transportation would be necessary for a burgeoning population. Saying that he heard that in 10-20 years an entire population the size of Chicago would be dropped on Los Angeles, Bonner argued all innovate transportation systems would be needed, from hyperloop to high speed rail to the sharing economy transportation systems.

Brogan BamBrogan, co-founder and chief technical officer of Hyperloop One (formerly Hyperloop Technologies), which is running with Musk’s idea, told the conference that while most people have been talking about hyperloop pods as people movers, one great advantage of hyperloop would be carrying freight.

BamBrogan noted that California had two of the busiest ports in the country. He envisions the system as energy efficient, weather proof, and non-polluting. Anyone stuck behind the slow-moving line of trucks coming from the San Pedro ports up the Long Beach Freeway spewing exhaust will appreciate BamBrogan’s vision.

But the people mover aspect also could have profound impact on other social issues, if the predictions made at the conference play out.

California’s steep cost of housing is driven, in part, by the lack of places to build. BamBrogan suggested the hyperloop could reset land values and grow suburbs 30 or more miles from the city when it only takes six minutes to commute to downtown Los Angeles’s Union Station.

Hyperloop is counting on investors to help fund the project, something that has been lacking with high-speed rail.

However, Bonner warned that re-thinking might be necessary with dramatic changes in transportation. If fewer people use cars in a shared economy, there will be fewer fees and taxes paid associated with car ownership. There would also be fewer citations issued with accompanying fines.

The Milken Global Conference panel was called Harnessing Technology for the Future of Cities. BamBrogan’s hyperloop discussion starts around minute 18.

This piece was originally published by Fox and Hounds Daily

Is Hyperloop Technology the Future of CA Transportation?

Hyperloop mockupElon Musk proposed it years ago. This January, he announced he’d enable teams to test it out on a track in Texas. But the first entrepreneur to ink a deal for a Hyperloop test track will bring the concept to life in California.

According to Navigant Research and CBS News, Hyperloop Transportation Technologies — an entity that picked up independently where Musk left off with the idea — “has inked a deal with landowners in central California to build the world’s first Hyperloop test track.” Beginning in 2016, HTT would oversee construction of five miles of track along I-5, where, once completed, test speeds will be kept to around 200 miles per hours — less than a third of the top rate of travel envisioned by Musk.

Outlays for the fully-completed Hyperloop would likely come in far under the budget for California’s high-speed rail project, even with cost overruns:

The 5-mile test track is estimated to cost about $100 million, which Hyperloop Transportation Technologies hopes to pay for with its initial public offering (IPO) later this year, according to Navigant’s blog. Assuming building costs remain the same, a 400-mile (644 km) track between Los Angeles and San Francisco would cost about $8 billion (not including development costs), experts estimate. This price tag is still far less than that for California’s planned high-speed rail project, which could cost $67.6 billion, according to the California High-Speed Rail Authority.

Multiple teams

HTT emerged from a crowdsourcing platform, JumpStartFund, created in 2013 by Dirk Ahlborn. “He’s used it to attract experts with day jobs at universities and companies such as Boeing and SpaceX who moonlight on the project in exchange for future profits,” as National Geographic explained.

But HTT has developed a reputation as the scrappy upstart among contending Hyperloop initiatives. Hyperloop Technologies, based in Los Angeles, assembled an all-star team. NatGeo counted “Brogan BamBrogan, a key former SpaceX engineer; Jim Messina, the manager of President Obama’s 2012 re-election campaign; David Sacks, who worked under Musk at PayPal, and Shervin Pishevar, investor in ridesharing company Uber who prodded Musk to go public with his Hyperloop vision.”

Skepticism and savvy

As has long been the case with newfangled technologies, critics have not been shy about questioning the mechanics behind Hyperloop’s eye-popping goals. Beyond simple safety concerns — a leak in the vacuum created to make it move so fast would be disastrous — critics have claimed that “solar panels alone cannot generate the energy needed for 800mph travel. Even if successful, the issue of the enormous g-forces experienced by passengers when travelling at the Hyperloop’s top speed will also need to be addressed,” Alphr reported.

But for now, the intrinsic appeal and excitement of Hyperloop has brought enough momentum to carry the project forward. Looking to capitalize on the interest, Ahlborn has even teased the ultimate in futuristic transportation: a free ride. As Endgaget noted, he revealed “he’s considering a business model that apes what we see in free-to-play mobile games. The CEO is kicking around the idea that the travel itself would either be free or dirt cheap, with passengers charged for a series of as-yet undisclosed upgrades. Of course, since we’re still a decade or more away from a commercial version of the system, there’s plenty of time for him to change his mind.”

In the meantime, Hyperloop’s innovators have already encountered initial opposition from a potentially more formidable foe than armchair critics: California’s own government. “Transit authorities in California reportedly balked at the idea,” according to Fast Company, “concerned about earthquakes and the fact that such a system would have to span all kinds of terrain and privately owned land.” With his I-5 corridor test track, Ahlborn has begun to answer at least one of those objections.

Originally published by CalWatchdog.com

Elon Musk May Have Even More Cash To Roll In Thanks To Solar Subsidies

Elon Musk has made millions from government solar panel subsidies, and may have found a way to make even more if rumors Tesla will soon introduce a whole-home battery are true.

Musk, the CEO of Tesla Motors and chairman of solar panel manufacturer SolarCity, set off a wave of anxious speculation Monday when he tweeted that “[a] major new Tesla product line—not a car” would be unveiled on April 30.

Neither Musk nor Tesla have confirmed any details about the new product, but according to The Motley Fool, many observers believe the new product will be a home battery capable of storing electricity produced by solar panels.

Musk told investors during a February conference call Tesla would begin production of a home battery within about six months, and further reinforced expectations with a second tweet, in which he said, “With all that solar power being generated, it almost feels like something is needed to complete the picture …”

Many experts, however, claim much of the reason for all that solar power being generated is that state and federal subsidies make rooftop solar panels affordable in the first place. (RELATED: Solar Industry Demands Extension of Subsidies)

In an op-ed for Townhall, for instance, Ken Blackwell asserts that, “Very few people would install these rooftop solar systems at all if not for the federal tax break that comes with it,” which takes the form of a 30 percent non-refundable tax credit known as the solar investment tax credit.

Even the Solar Energy Industries Association, a national trade group, acknowledges as much on its website, noting that, “the residential and commercial solar ITC has helped annual solar installation grow by over 1,600 percent since the ITC was implemented in 2006.”

Another program that acts as an implicit subsidy for solar is net metering, which requires power companies to purchase excess solar from homeowners at the same price they charge their retail customers. Most states have their own net metering policies, and since 2005, federal law has required all public electric utilities to offer net metering to their solar customers on request.

Electric companies complain that net metering ignores the cost of operating and maintaining power grids, which they say accounts for about one-third of the price they charge for electricity. Because solar customers use the grid whenever they buy or sell power, the utilities argue net metering allows solar users to use the grid as a battery without contributing toward operating costs, forcing them to raise rates on other customers. (RELATED: Low-Income, Minority Households Bear Costs of Solar Subsidies)

According to a study from the University of Colorado at Boulder conducted by Chrystie Burr, “most of the investments in solar power systems wouldn’t have been made without the … upfront subsidy and the residential renewable energy tax credit.”

Similarly, a study by Kenneth Reddix II of the University of North Carolina at Chapel Hill concludes that in California, “over 54 percent of all purchases would have not occurred … in the absence of government subsidies.” (RELATED: Europe’s Green Energy Industry Faces Collapse as Subsidies are Cut)

If Tesla’s new product does turn out to be a home battery, as is widely expected, Musk will stand to profit twice from those subsidies—once from SolarCity’s sales of the subsidized panels, and then again from Tesla’s sale of home batteries to the same customers.

“Elon Musk is making a big play for American solar and all the subsidies that go along with it,” an energy industry consultant told The Daily Caller News Foundation. “If you’re getting millions from the federal government and a subsidized power grid, you might as well keep offering related products.”

Originally published by the Daily Caller News Foundation

Do Newer Technologies Threaten High Speed Rail?

So many lies were told to convince voters to approve the High Speed Rail project six years ago, that most Californians have soured on it. They are appalled that the estimated cost to build, the time to build, the time between destinations and the price of a ticket have all nearly doubled since voters approved a $10 billion bond to kick start the project.

Add to this that the private investment that backers promised would limit taxpayers’ liability is nowhere to be seen and it is little wonder that even the former Chairman of the High Speed Rail Authority, respected independent Quentin Kopp, has excoriated the project as it has morphed into something wholly unrecognizable from what the voters approved.

It is somewhat ironic that Governor Brown, who fancies himself as a futurist (as Governor in the 1970s he thought California should have its own satellite) wants to commit Californians to spending billions of dollars on what is increasingly apparent to be an aging technology. Today’s futurists and tech savvy interests are suggesting that investing in High Speed Rail might be tantamount to buying stock in a chain of blacksmith shops in 1910 just as the automobile began replacing the horse as the dominant form of personal transportation.

The first successful powered railroad trip is said to have taken place in the United Kingdom in 1804. More than two centuries later, the train remains the best way to move large quantities of heavy goods. But for moving people, is the huge amount of capital investment in equipment and track that impedes the crossing of vehicles and pedestrians, destroys neighborhoods and farmland, and degrades wildlife habitat, really essential?

Elon Musk, who heads successful high-tech companies Tesla Motors and SpaceX, believes there is a better way to move people. Musk favors the Hyperloop, or something similar, that would whisk travelers between San Francisco and Los Angeles in as little as 35 minutes. Compare this with a drive time of six hours, a bullet train time of about four hours, and an hour by air.

The Hyperloop is a hovering capsule inside a low-pressurized tube, supported by pylons, which can reach speeds of up to 760 mph. According to Hyperloop CEO Dirk Ahlborn, within about 10 years and with about $16 billion, Hyperloop could become a reality. He believes it would it would be easy to put together, the challenge is to come up with a good business model.

As with High Speed Rail, there are many unanswered questions and hurdles with Hyperloop. However, it does appear to be cheaper, faster and able to be completed more quickly than the bullet train and would be less environmentally intrusive.

Moreover, for taxpayers, it doesn’t appear that public dollars are being spent on the design of this project. Unlike High Speed Rail, the Bay Bridge and the Twin Tunnels projects, keeping this project in the private sector – at least in the concept and design stage – is resulting in some fairly notable progress in a short period of time.

In addition to the Hyperloop concept, rapid advances have been made with driverless cars. Fuel efficient personal vehicles directed by computers show great promise and the technology is no longer theoretical. Google has already built a prototype. And best of all, they can operate on an existing infrastructure project which we call roads.

High Speed Rail’s cost dwarfs all other public infrastructure projects by many factors.  Before we commit more money to this project – whose funding is very much in doubt – shouldn’t we be sure there isn’t a better and cheaper alternative?

This article was originally published on HJTA.org

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.