Boring Company Will Be Worth More Than Tesla

hey I'm Zach from now you know welcome to this episode on our boring tunnel future on this episode we're going to reveal a type of project that the boring company could soon be building and how this could easily make the boring company one of the most profitable companies in the world [Music] you see to date the projects that have been publicly disclosed as possible boring company tunnel projects have all been break-even to money-losing public works projects moving people from downtown Chicago to O'Hare Airport is a great idea for Chicago but it won't generate much revenue for the boring company from a long term perspective the same is true for the dugout loop the Las Vegas Convention Center project the Las Vegas Strip and every other public works project that a locality would pay for this class of project uses the boring company like a road building contractor the boring company will get paid to do the work but will not participate in long term revenue whether or not the revenue would result in profitable enterprise and for these public transportation systems many would not be profitable the boring company would gain useful experience period once the boring company has built its first urban boring tunnel project and the huge benefits to society are realized as we discussed in episode 2 the boring company will begin a new class of project what we're calling golden goose projects because as we'll show you they're going to be unusually profitable this class of project consists of tunnels built beneath existing freeways and open to private people with private cars that are able to drive through the tunnels instead of elevators within the city interior access to these tunnels will largely be via in ramps placed at normal freeway on-ramp locations where as it costs 25 million dollars on average to add a one-mile lane to a freeway in the US and it costs on average about 43 million in California it is expected to cost only 10 million to add a bi-directional boring tunnel along an existing freeway corridor this means for tunnels the cost per Lane mile will only be five million dollars this is nearly 1/10 the cost of a lane mile in California this episode discloses the corridor where the first of these Golden Goose tunnel projects is likely to be built the 74 mile-long corridor from Fountain Valley California two thousand oaks following I 405 - I 101 included in this corridor is the initial section from Hawthorne into Bel Air the importance of this particular section is that as Elon Musk personal commute route between his home in bel-air and his work in Hawthorne building this tunnel section will enable elan to transform his commute often more than an hour into an eight point five minute breeze building a bi-directional tunnel along this corridor will also serve as the initial phase of a longer project from San Diego to Seattle the construction of the section of tunnel between Los Angeles and San Francisco and continuing across the Golden Gate to Santa Rosa will create the first high-speed ground transportation connection between San Francisco and LA completing this stretch will beat the California high-speed rail boondoggle Elon Musk said of the California high-speed rail that if built it would have the dubious distinction of being the slowest system in the world that costs more than every other system in the world to build a West Coast tunnel from Mexico to Canada requires that construction must begin somewhere and the best place for construction to begin will be along the portion of the West Coast tunnel following I 405 and I 101 from Fountain Valley two thousand oaks this is a seventy four mile stretch of 405 and 101 freeways that suffers unusually high traffic essentially 365 days a year as I'm speaking right now at 10 a.m. Pacific time I can see on Google Maps that this journey has several stretches color-coded red where stop-and-go traffic exists in spite of the time being 10 a.m. on a Wednesday to drive that stretch right now Google estimates it would take a hundred minutes to traverse the 74 miles the average speed would be 44 miles an hour in most cities traffic would be freely flowing after the morning commute in Los Angeles however traffic is an all-day problem this stretch of freeways is consistently congested and in desperate need of a solution within a boring company tunnel the entire 74 mile journey would take just 37 minutes no matter what our one chooses to make the trek but what's possibly more important than the 120 mile an hour speed is that within the tunnels because the journey of every single car is planned from entry to exit prior to entry being allowed travel is always consistently at 120 miles an hour traffic within the tunnel system will never Furby stop-and-go the same cannot be said for the special toll routes in the LA area which in spite of high tolls being charged still wind up with stop and go traffic during rush hours to drive the freeways one would need to remain intensely focused on other drivers potentially crashing into you to use a boring company fully autonomous tunnel one could sit back and relax meditate with your eyes closed read a book watch a video eat a meal send emails or take a nap as there would be absolutely nothing for the driver to do while inside the tunnel okay so what tunnels have a lot of advantages that surface freeways don't grate but that doesn't necessarily make building and operating tunnels a good business to get into so why are we suggesting that this 74 mile is going to be a Golden Goose for the boring company as we previously discussed in Hawthorne California on December 18th Elon Musk disclosed that it cost the boring company ten million dollars to build the slightly longer than one mile tunnel used for the tunnel opening event he also disclosed that they were developing new tunnel boring machines expected to significantly improve the pace of tunneling it is therefore logical to assume the cost per mile of bi-directional tunnels will be about 10 million dollars so the 74 mile initial bi-directional tunnel from Fountain Valley two thousand oaks will cost seven hundred and forty million dollars and the first 17 mile portion of that section running from Hawthorne to bel-air will cost about a hundred and seventy million the next side of the business equation is what the income might be after researching what commuters living in the Los Angeles and San Francisco urban areas are currently paying to drive during higher traffic periods we find that tolls run between 25 and 35 cents per mile today people driving internal combustion engine cars are already paying 20 cents per mile just for the gasoline therefore it seems reasonable to ask for at least 20 cents per mile as the toll for EVs that do not pay for gasoline in order that those v's benefit from using the tunnels the last piece of the equation we need in order to figure out the business prospects of tunnels is the number of people that are expected to use them on a daily basis this is the only real unknown will people be afraid of tunnels and not use them or will people flock to the tunnels to escape stop and go traffic I suspect the latter answer la traffic is horrible and any way to escape it will gladly be adopted by most within tunnels autonomous computers onboard the Eevee's combined with the tunnel control systems are watching every move at every moment along every inch of the tunnel system what's more because tunnels are one way only there is ZERO possibility that two cars can collide head-on tunnels will be dramatically safer than freeways where people crash every day for most people the ability to travel at 120 miles an hour without any stop-and-go traffic will be sufficient to convince them to give the tunnels a try and once a person is able to travel reliably at 120 miles an hour going back to surface freeways with stop-and-go traffic averaging 20 to 40 miles an hour will be intolerable but how many people per day might use one of these tunnels it turns out that the number of vehicles using a freeway can vary a lot many freeways only have a few thousand vehicles per day passing a point on the road others have 300 thousand or even 400 thousand vehicles passing a location this makes clear one attribute a good route for a tunnel will have it will have a large number of people the so-called average annual daily traffic number to reach breakeven no matter where the tunnel is built is going to require approximately 5200 vehicles making round trips so to break even the boring company must build the initial tunnels in places were 5200 round trips for ten thousand four hundred daily tolls are generated this level of usage is break-even no profit and no loss the route proposed here has approximately 200,000 to 300,000 daily vehicles depending on location the toll of 20 cents per mile to use the boring tunnel will actually be the same as the cost they were paying to fuel their cars with gas before it's not unreasonable to estimate that at least 25,000 commuters or 50,000 tolls per day will choose to take the tunnel option to avoid crippling traffic above so the boring company will spend seven hundred and forty million dollars to build a 74 mile from Fountain Valley two thousand oaks california and collect a two hundred and seventy million dollars per year in tolls within three years the tunnel construction cost was you pay for from toll income how does this compare to a real toll road well several years ago a Canadian pension fund paid 2.8 billion dollars for the seven-point eight mile Chicago Skyway expected to generate toll income around 280 million dollars per year so that the fund enjoyed a 10% internal interest rate of return the proposed boring company tunnel is about 10 times longer the annual revenue is about the same but the cost to build the tunnel is about 1/4 the cost paid for the Chicago Skyway clearly the tunnel is the better business proposition one aspect that may not be obvious is the fact that the boring company is going to increase Tesla evie sales this is because wherever the boring company builds a tunnel people are going to purchase Eevee's to be able to use the tunnel and if tesla is the only company selling v's with tunnel approved software then tesla will win 100% of the sales to people that want to escape freeway traffic we expect that along the proposed route studied here approximately 200,000 new Tesla V's will be sold in the first two years after tunnel completion the value of this business is approximately nine billion dollars if we assume a $50,000 average sale price at a twenty five percent profit margin Tesla would profit about two billion dollars the synergy of these two companies is obvious for long distance tunnels such as a west to east coast tunnel following I forty or I ten the tunnels will install solar and wind farms to power blowers to reduce the energy needed by vehicles using the tunnels for every 100 miles the boring company builds across rural America the tunnel cost will be around a billion dollars out of that approximately 200 million will fund construction of solar and wind farms with battery energy storage and blowers that will be constructed using model 3 motors coupled to fans to blow air down the tunnel the high profits will fund the rapid expansion of the tunnel system and with that expansion will come a rapid increase in sales of tunnel capable EVs this will also speed the end of ice vehicle manufacture because they will not be allowed into the tunnels and few people will choose to purchase a vehicle that cannot use the tunnels the more EVs that are sold the more routes will become profitable for tunnel construction tunnels will provide the positive feedback for the acceleration of the Evie revolution that steamboats on canals did for the revolution from sailing ships to steam ships two centuries ago if we extrapolate from the first 74 mile tunnel we can see that the financial metrics of building 1,000 miles of boring tunnel in the LA basin is highly profitable for every dollar spent by the boring company it will generate five dollars in assets the boring company's annual income will be three point two nine billion dollars and the net worth of the thousand mile tunnel system will be over fifty billion that's a bigger market cap than Tesla today once the boring company has built about 1,000 miles of tunnels in the LA basin the traffic in Los Angeles will have undergone a radical transformation from the worst traffic in the world to the best urban traffic in the world and the air in Los Angeles will potentially be cleaner than it has been in a hundred years in 2028 the Olympic athletes will appreciate that improvement as will all the kids that won't get asthma after the air is clean once the first highly profitable tunnel is built everyone will understand that tunnels are going to fix our failed surface freeways the latest video showing a car traveling at 127 miles an hour through the tunnel is just the beginning of this tunnel transportation aspect of the evie revolution thank you for joining us on this episode stay tuned for part six where we will learn about the implications of life with boring tunnels and what will it mean for all of us in our boring tunnel future now you know thanks so much for watching now you know we work hard to bring you videos about things that we think you'll find useful but we need to know from you what you want to see so leave your comments below also don't forget to go over to our patreon page where for as little as a buck a month you can watch our patreon bonus story every week on Tesla time news thanks again we'll see you soon

Channel: Now You Know

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Keywords: now you know, autonomous cars, future technology, tesla time news, the future, science, zac, jesse, autonomous driving future, tesla, autopilot, self driving cars, nyk, solar power, future driving, tech, cars, car show, science show, tesla autopilot, the boring company, loop system, hyperloop, elon musk, innovation, digital culture, boring company, tunnel, futuristic, project, spacex, commute, las vegas, chicago, ny, transportation, america, The Trillion Dollar Tunnel Market, money, cost

Id: iRi0bL484J0

Length: 13min 28sec (808 seconds)

Published: Sat Jul 20 2019