Elon Musk’s tunnel system works, but the real test is still waiting

(Bloomberg) – The CES technology show in Las Vegas last week was a major milestone for Elon Musk’s Boring Co., which operates a network of underground tunnels to ferry passengers around the massive convention center of Tesla Inc. cars.

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The Vegas Loop did well for the most part, despite hitting some issues that were captured on video and mocking Twitter against a company that has said its mission is to “solve traffic.” Another element of Musk’s original vision also seems to be fading: The vehicles are dependent on human drivers behind the wheel, a provision that is unlikely to change for the time being.

Las Vegas officials, however, indicated they were happy with the results last week. Figures provided to Bloomberg by the Las Vegas Convention and Visitors Authority show that the transit system successfully transported about 15,000 to 17,000 people daily during CES, nearly half of the show’s participants. According to Boring Co. the average waiting times at the three stations were less than 15 seconds. Amusements took less than two minutes on average, in line with what LVCVA predicted when journalists visited the site in April.

The figures show a solid performance for Boring Co., although CES was hardly the rigorous testing of its systems some hoped for. Because an increase in Covid-19 cases dramatically reduced attendance at the conference and shortened the event, many fewer people took the tunnels than would otherwise have done. It is still unknown how the system will stay under radically higher demand.

The throughput and durability of Boring Co.’s Las Vegas tunnel system – the company’s first commercial project – is important for a few reasons. First, the startup is in negotiations with several cities around the country, all of whom are probably eager to see how the startup’s technology performs in the real world before signing a contract.

Second, the company’s compensation for the Las Vegas project is linked to how it performs during major conferences such as CES. Under the contract, Boring provided a $ 4.5 million letter of credit to LVCVA. The money that Boring Co. owes the authority, will be reduced by $ 300,000 each time the company carries an average of 3,960 passengers per hour for 13 hours at a major conference.

Because this year’s show only attracted about 40,000 attendees, compared to 170,000 in 2020, the smaller audience almost certainly means Boring was unable to prove it could meet the passenger minimum outlined in the contract. LVCVA declined to give hourly averages.

But the company was able to hit those numbers during a recent test, the agency said. In December, LVCVA’s CFO Ed Finger told the agency’s audit committee that the auditing firm BDO confirmed that the system carried 4,431 passengers per hour in a test in May. That was more than enough to allow Boring to receive the final installment of its $ 44.25 million total payment under the contract.

The test ran for an hour and involved more than 300 volunteers, Finger said. The contract allows Boring to run tests with 10% of the vehicles required for system capacity, with the addition of an engineering analysis to predict what the rates would be if more vehicles were used. After the tests, the county approved an increase to 70 Teslas for the transit system.

If the Las Vegas project is successful, it could encourage other cities to sign contracts with Boring Co. Fort Lauderdale, Florida and San Bernardino County, California, are in various stages of negotiations on their own tunnels. In San Bernardino County, where Boring Co. have until the end of this month to submit a proposal, the plans are still in limbo.

“Negotiations have proved challenging,” Carrie Schindler, director of the county’s transportation authority’s transit and rail programs, said at a public meeting Thursday. She said that although Boring Co. originally proposed autonomous vehicles, it was “no longer committed to autonomous technology”, which would affect the county budget for the final operation of the project. Autonomous technology had once been an important selling point for Boring Loop systems.

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