Elon Musk: I Can Build It Cheaper – and Better

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I’m a lawmaker in Sydney, which is choking with traffic. How much to build a 50km tunnel through the Blue Mountains and open up the west of our State?

So asked Jeremy Buckingham, an independent member of parliament in NSW, on Twitter.

It’s a question that demanded an answer.

And look who responded… Mr Elon Musk.

Musk is the billionaire technology entrepreneur known for his stakes in PayPal and Tesla.

Oh, and sending rockets into space.

As an Australian, you might be familiar with Musk for a different reason.

Musk’s last venture in Australia involved his electric car company, Tesla, building the world’s biggest lithium-ion battery in South Australia.

 When you have a technology project that needs great minds…

Just hire Elon Musk!

I can’t think of anyone better suited to pull this off.

Buckingham’s proposed tunnel under the Blue Mountains would help solve one of Sydney’s traffic congestions.

He said that traffic is choking the city, before floating an idea past Musk to be part of the next great infrastructure project to solve it.

It appears the tweet may have been misinterpreted.

Buckingham’s intention was to build a simple underground railway link.

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It appears Musk has much bigger intentions.

Ones that could see Musk building some form of futuristic hyperloop that transports cars!

How much for that proposed tunnel, you ask?

Musk tweeted: ‘About $15M/km for a two way high speed transit, so probably around $750M plus maybe $50M/station’.

It didn’t take long before speculation and disagreement started to occur.

Philip Pells was one specialist who didn’t agree.

Pells is one of the senior personnel behind Sydney’s harbour and Eastern Distributor tunnels.

He’s out by at least a factor of 10 and up to a factor of 50,’ said Pell.

He then went on to say that Musk ‘is dreaming’.

It appears Pells doesn’t think Musk can build a tunnel for less than a billion dollars.

As stated above, Pell’s expertise was used on the Eastern Distributor, which is a six-kilometre motorway that boasts 1.7 kilometres of double-deck tunnelling.

So, yes, his opinion matters.

But I have faith in Musk. And you should too. Here’s why.

Elon Musk has already got the technology!

Musk brought to the world a concept whereby we could travel underground via subterranean network cable, travelling up to 240 kilometres per hour.

And the tunnel is going to be built by Musk’s Boring Company.

Musk is a perfect example of how innovation can reshape the status quo. Tesla is almost single-handedly responsible for redirecting the entire global automotive industry. 

And yes, this is just a concept.

Musk is yet to develop the tunnel under Los Angeles.

But the mile-long prototype has been finalised and is currently being tested.

And Musk has already forecast the cost of the LA tunnel.

According to Musk, a mile-long tunnel should cost around $10 million, not including the machinery, research or development.

By comparison, digging a mile-long tunnel the traditional way would cost up to $1 billion. And take three to six months to complete.

If Musk is given the thumbs up for the Australian tunnel, it will ease the traffic congestion between the Blue Mountains and Sydney.

This is where it starts to get interesting.

You may not live in this area. But that doesn’t mean you can’t benefit…

There’s gold in the value of the land

If this project goes ahead, it’s going to be a windfall for existing landowners in the area. The benefit of any infrastructure is always captured in the surrounding real estate.

If you want to see how this concept works, look no further than the Crossrail project in the UK.

The Crossrail project has provided a 117-kilometre express service connecting the east to the west.

Journey times in some suburbs were cut by more than three-quarters.

The major benefit is that outer suburbs will now be closer to the centre of London.

By how much did the value of land increase?

Canary Wharf is located 17 minutes from London. The new Crossrail brought travel down to six minutes.

Property growth in this area has averaged 34% since 2011.

Further out, Abbey Wood is located 50 minutes from London. This suburb saw the greatest improvement, bringing travel down to 17 minutes.

Property growth in this area has averaged 146% since 2011.

Of course, the Crossrail is not the only influence on these two suburbs. But it’s interesting to note how the suburbs’ increasing proximity to the city saw land values grow.

Can we expect the same in Australia?

I believe we can.

I believe we should appoint Musk and his team to the project.

And…

If the plan reaches stage two, start monitoring the value of land in this region.

It may prove to be a fantastic investment (or learning opportunity).

This won’t be the last time Musk is involved in Australia’s innovation push.

Until next time,

Jim Rickards Signature

Jonathan Evans,
Analyst, Profit Watch

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