The Boring Company – White Elephant

The Boring Company reinvents the wheel.

  • We were promised autonomous pods zipping through undercity tunnels at 200kph / 150mph but what we got was Tesla-taxis chugging from one side of the Las Vegas Convention Center (LVCC) to the other at 30mph.
  • The Boring Company did make it look pretty cool with funky LED lighting but stripping away the form makes one realise that this is a system that could be bettered by three bendy-buses at a fraction of the cost.
  • There is no doubt that the LVCC has transport problems during CES when around 200,000 people used to descend upon the venue over a 4-day period.
  • With the new building making the venues at the Sands and other areas obsolete, the crowds milling around in one area are expected to increase once some semblance of normality remerges.
  • Hence, the LVCC engaged The Boring Company to have a go at solving this issue where it does not get fully paid unless it can deliver 4,400 passengers per hour in each direction.
  • Even with 60 cars (it now has 16), the best one could expect in each direction would be around 1,000 passengers per hour.
  • I suspect that better performance would be achieved by using trains or busses in the tunnels rather than cars or extending the Las Vegas Monorail to cover the same stretch.
  • So, in effect, what The Boring Company has done is reinvent a system that emerged over 150 years ago with steam trains under the streets of London but with greatly reduced capacity.
  • Part of this is due to cost because by making the diameter of the tunnels very small (much cheaper to dig) it means that no trains or busses can fit.
  • The current plan is to extend this loop to the Las Vegas strip and the airport but with this level of capacity, the rides would have to be very expensive just for the system to break even.
  • Hence, most users would immediately revert to taxis or ride-hailing (which is what this essentially is) above ground at a fraction of the cost.
  • Consequently, I cant see the city of Las Vegas going much beyond what it has allowed The Boring Company to dig already meaning that this idea is going nowhere fast.
  • A good use of these tunnels in the long term might be to turn them into pedestrian tunnels as that would relieve the foot traffic on the ground and make it quicker and easier for the 200,000 people or so to walk from one side of the LVCC to the other.
  • I suspect that that would be a much easier way to hit the 4,400 per hour capacity target demanded by the LVCC in its contract with The Boring Company and would turn a white elephant into a usable asset.
  • Many attendees at CES and other trade shows would also benefit from the added exercise.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.