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Investing in Elon Musk's Hyperloop System

Written By Jason Stutman

Posted July 16, 2013

One year ago, arguably the most ambitious entrepreneur in the world hinted at plans of building a new method of transportation.

This method of transportation would be immune to weather, would never crash, and would be twice as fast as an airplane. It would require less energy and would be cheaper than driving a car.

I’m talking about Elon Musk’s San Fransisco-to-Los Angeles Hyperloop system.

The Future of Travel

According to Musk, the Hyperloop would cost around $6 billion, which is considerably cheap considering the bullet train being proposed in California would run at around $60 billion. Not to mention, the Hyperloop would run up to four times as fast as the bullet train.

And while this may sound like a pipe dream, betting against Elon Musk and his ambitious projects can hardly be considered a good idea.

When looking at the success of Paypal, SpaceX, and Tesla (NASDAQ: TSLA), it is difficult to deny that if Musk wants something done, he is almost certainly going to see it through.

Musk announced yesterday via Twitter that he will publish the Hyperloop design by August 12. He requested feedback on the design and pointed out that it would not be patented.

The tech mogul was also quick to clarify that this is not a vacuum tunnel, which is admittedly what immediately came to my mind when I first heard about the Hyperloop. And while we can be sure that the system is not vacuum powered, a visualization may be helpful in understanding the general concept of faster and more efficient travel:

Instead, Musk described the system as a “cross between a Concorde, a rail-gun, and an air hockey table”.

Now, that obviously doesn’t paint a very clear picture, so we will have to wait until the design is released to get a better understanding of what this system really entails.

However, we already have enough information see how this could affect investors.


Solar Travel

When discussing the Hyperloop last year, Elon Musk mentioned several times that the system would be powered by solar panels. He described a system that could actually produce more power than it uses.

Last week, Jeff Siegel informed Energy and Capital readers that Tesla would be providing batteries for SolarCity Corp’s (NASDAQ: SCTY) new bundled packages of solar panels and batteries.

Jeff pointed out the importance of the close relationship between Musk and SCTY. He argued that this relationship was indicative of future cooperation between these parties, and I am extremely keen to agree on the matter.

Elon Musk is listed as a major direct holder and the Chairman of SCTY. Furthermore, Musk is the cousin of CEO Lyndon Rive and COO Peter Rive. Musk has also previously gone on record saying that when entering business partnerships, it is more important to have a good relationship than it is to save a few dollars.

If the Hyperloop does get built, it is going to need a supplier of solar panels. And while some may consider this speculation, I would place it much closer to the realm of certainty: SCTY is the number one candidate to provide those panels.

Turning progress to profits,

  JS Sig

Jason Stutman

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