Hyperloop Is Coming Fast to Disrupt Transportation

Imagine traveling from San Francisco to Los Angeles in about the same time it takes to get a Domino’s pizza delivered.

Far-fetched?

It’s definitely possible, and it got one step closer to reality recently, researchers say.

Hyperloop One is a California startup. It hopes to use vacuum tubes and magnetic-levitation pods to shuttle passengers between major cities at 760 mph.

It’s ambitious, and on May 12, the company completed the first full-scale test of its technology. It was a stunning success.

Shervin Pishevar, Hyperloop’s cofounder, called it a “Kitty Hawk moment.”

He has a point. Potentially, it is as significant as the advent of human flight. Technology capable of moving people and cargo at near-supersonic speed might change entire sectors. Investors certainly need to take note.

It would not have been possible even a decade ago. The rapid growth of compute power made new modeling techniques possible. Democratization unleashed enterprising engineers to go out and change the world.

Hyperloop is the stuff of science fiction novels.

The concept comes from the brilliant mind of Elon Musk. The Paypal (PYPL), Tesla (TSLA) and Space-X founder felt plans for a $68 billion California high-speed rail-project didn’t push the envelope of what is possible.

Why not build a silky smooth, solar powered, earthquake-resistant, pod-based transportation system? It would be cool, he opined.

Well, when you put it that way.

From there, several teams took up the project and began working on the math. Almost two and a half years later, the Pishevar-led group is the furthest along.

Pishevar, an early investor in Airbnb and Uber, told CBS Morning News that the company is developing next-generation components and software that make Hyperloop One the “safest, cleanest, fastest form of transportation in the world.”

So far, tests have pushed mag-lev pods to only 70 mph. The speed will come later. The hard part is building the vacuum system and maintaining safety.

In theory, sucking all the air out of the tube means no resistance. No turbulence. The company draws the analogy to flying at 200,000 feet.

That promise has attracted a slew of interest from around the world.

Currently, Hyperloop One is conducting feasibility studies in Finland, Sweden, the Netherlands, Switzerland, Russia, the U.K. and the United Arab Emirates.

The official corporate promotional video envisions a modular system with autonomous vehicles summoned from a smartphone application. They zip along on regular streets before slipping into the terminal where they funnel into the mag-lev pods. After being whisked to their destination on Hyperloop, the autonomous vehicles disembark and ferry clients to their final location.

Recently Musk unveiled the Boring Company. Yep, that’s what he called it.

The company has devised a giant tunneling machine prototype – Boring Machine 1 – to create a network of underground passages to relieve vehicular traffic with a high-speed electric skate system.

Not coincidentally, these tunnels can also be outfitted with hyperloop technology.

All of this may still seem like science fiction. However, at least two hyperloop teams are on a path to legitimate real-world projects.

In June, Wired reported that Hyperloop Transportation Technologies has contracted with the government of South Korea to build a working system in just four years. Meanwhile, Hyperloop One is building a prototype in UAE.

Hyperloop is going to happen.

For investors, it’s a game changer. It redefines what is possible in ground transportation and logistics. It means new business models for old economy companies. It means new integrated circuits, software platforms and ultimately, the redesign of urban centers for the new economy.

And it could be devastating for the conventional trucking, railroad and airline industries.

It will also mean significant infrastructure investment. Expect this to begin in Asia and the Middle East where willingness to cut through red tape runs deep.

There are ways for investors to play this. It’s not too early. Public companies are already well positioned to take advantage. And I will find them for my newsletter members.

Best wishes,

Jon Markman