On Recode Decode podcast with journalist Kara Swisher on November 2nd, Elon Musk indicated his Boring Company is set to open the two-mile test tunnel underneath SpaceX’s headquarters in Hawthorne, California on December 10th to the public. More interesting was the detail he provided in his proposed solutons for tunnelling costs. While typically tunneling costs can range to 1 billion per km or mile depending on the complexity of the rock underneath for tunnel boring work by tunnel experts, Musk has suggested it took about 10 million US dollars to do his 2 mile test tunnel so far 6 weeks before it opens. Within a margin of error that is 100 x less than what tunnel boring companies currently charge governments around the world to implement for roads and train tunnels. Musk suggested using knowledge from spacex and tesla he will disrupt both the time to construct and cost to build tunnels.
Consider in Melbourne, Australia. They have proposed to create an underground tunnel around the city. The length is about 50km and is projected to cost 50 billion dollars and take over 30 years to complete. If Musk proves to be correct in his assumptions, public transport infrastructure could potentially be disrupted around the world, with perhaps freeways potentially being displaced if road tunnels could provide some better options. Governments have so far been limited by very high tunnel costs to implement road traffic and public transport solutions that are both very costly and can take over a decade to complete. Consider widening an existing freeway with extra lanes could cost $500 million, if Musk could disrupt tunneling it could open up numerous opportunities to reduce road congestion, traffic flow and more investment in tunnelling in public transport. For comparison the London crossrail cost 20 billion US dollars for 21km of tunnels. Also a new train station in New York City under Grand Central Terminal and a tunnel connecting it to the Long Island Rail Road will now cost $11 billion.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
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