For the past 18 months we've watched in wonder as "The Boring Company" evolved from tweet into reality. With each passing day, it's sounding more and more like Elon Musk seriously intends to build a company to bore tunnels underground to carry commuter traffic.

It all began in December 2016, when Musk posted a (not unprecedented) rant on Twitter about the difficulty of navigating L.A. traffic, and suggested he could "build a tunnel boring machine and just start digging."

Within just a few months the rumors began flying: Musk was bidding to build an underground train system for Chicago, to connect O'Hare airport with downtown. No, the tunnel would actually be several hundred miles to the east, and would connect New York City to Washington, D.C. Or perhaps it would both a smaller project and farther away -- connecting Washington, D.C. to Baltimore via a tunnel running under the Baltimore-Washington Parkway?

View from a Tesla Model X driving in a Boring Company tunnel

Image source: The Boring Company.

Rumors and reality

Which of these rumors are true? Potentially, all of them.

In March, the Chicago Sun-Times reported that The Boring Company (TBC) had been named one of just two finalists being considered to build a high-speed rail line to connect O'Hare with downtown -- and just this week, it was named the winner. And as regards the D.C. project(s), TBC has a FAQ on the Baltimore-Washington expressway project posted on its website, and insists the larger idea of building a Hyperloop connecting Washington to New York City is also still under consideration.

Meanwhile, back at the scene of the traffic-crime that started all this discussion -- Los Angeles, California -- Musk recently held a press conference to discuss progress toward The Boring Company's first major dig: a 2.7-mile tunnel underneath and parallel to the traffic-choked Interstate 405. Here's what he had to say.

Loop vs. Hyperloop

Before we go any further, though, it may help to define two related but vastly different terms: "Loop" and "Hyperloop."

Hyperloop is the Musk-musing that first grabbed the attention of mass-transit enthusiasts. In a paper published five years ago, Musk laid out his plan to create a system of above-ground tubes and underground tunnels -- all vacuum-sealed -- through which he would electromagnetically shoot pressurized "pods" containing passengers at speeds approaching Mach 1 (768 mph). Musk envisions Hyperloop as a sort of city-connector project, and an alternative to air travel, high-speed rail, and of course highway traffic.

Loop is in some ways a less ambitious project -- and the focus of Musk's press conference last month. Although utilizing the same kinds of tunnels that could accommodate Hyperloop pods traveling at Mach speed, Loop would be a slower system (about 150 mph), utilizing unpressurized pods running in a not-vacuum-sealed tunnel, and designed for more local transportation needs.

Musk describes Loop as a vision for "personalized mass transit," made possible by expanding traffic from the Earth's surface, which is thought of largely in two dimensions, into a third dimension -- underground.

As Musk explained, on any given portion of surface area, there is room for only a finite number of roads. But if it were possible to dig tunnels more cost-effectively than is done today, you could potentially create a system with "unlimited layers of tunnels," sufficient to solve "any level of traffic" problems a city might encounter in the foreseeable future. Should one layer of tunnels become congested, a second or third (or fourth, fifth, or 25th) layer could be added beneath it to alleviate roadblocks.

Access to these tunnels would be via elevator to and from the surface, with ingress and egress points taking up no more space than needed to accommodate the 16-person pods in which people would travel -- about the surface area of a few car-parking spaces. And their small size would mean there'd be virtually no limit to how many Loop "stations" could be built throughout a city -- up to and including (eventually, potentially) putting a "station" in every homeowner's driveway.

Safer than you think...

"But wait!" you say. "Doesn't Musk want to do this in California, the earthquake capital of America?" Well, yes, he is -- and that's a good thing. As The Boring Company CEO explains -- and as experts confirm -- when earthquakes strike, it's usually actually safer to be in a tunnel below ground than it is to be on a highway (bridge, or overpass) on the surface.

To bolster the point, TBC cites three major earthquakes -- the 1985 Mexico City earthquake, 1989 Loma Prieta earthquake in Northern California, and 1994 Northridge earthquake in Los Angeles -- in which not only did subway tunnels suffer no damage, but in some cases they served to transport rescue personnel who couldn't reach their destinations by way of damaged highways on the surface.

"The Source," official blog of the Los Angeles Metro transit system, confirms this: "Since underground structures move with surrounding soil, the Metro Rail system would not sustain damage or suspend train service in a low-magnitude earthquake. If a stronger earthquake were to occur, the Metro system would likely only experience minor, repairable damage."

There are exceptions of course -- when a subway tunnel actually crosses a fault line, for example, tunnel damage would be expected. But as a general rule, in cases other than the crossing of a fault line, tunnels have historically proven safer than highways.

...But probably more expensive, too

That's a strong argument in favor of Musk's tunneling ambitions in L.A. But there's still the question of cost to consider. As a general rule, Musk says it costs between $1 million and $4 million per lane-mile to build a highway. In contrast, historically, tunneling has cost closer to $100 million per mile -- and in some cases, tunnel costs have reached into the billions of dollars per mile.

To make tunneling -- and Loop, and Hyperloop -- possible, tunneling costs are going to have to go down (if you'll pardon the pun).

How to drive down costs

Much of Musk's talk last week, therefore, focused on the subject of how to drive down the cost of tunneling.

One factor is speed. As Musk explains, humans can walk at about three miles per hour. A tunnel boring machine, on the other hand, digs at the rate of about 0.003 miles per hour -- 1,000 times slower. Musk's objective with The Boring Company, therefore, is to accelerate the speed of tunnel-building by a factor of 10, to 0.03 miles per hour, or about the "speed" of a crawling snail. Such an improvement would cut the time to completion of a tunneling project by 50% to 66%, presumably with commensurate improvements in cost.

How does he plan to do this? First, by building a better boring machine.

TBC began with a modified standard boring machine, nicknamed "Godot" (one wonders how long they had to wait for it to be delivered), which TBC used to dig a 0.8-mile test tunnel near SpaceX headquarters. TBC is applying its experience with that test model to create an even more substantially modified boring machine that it calls "Line-Storm," which it expects to dig twice as fast, or even three times as fast, as standard tunnel-borers. Eventually, the plan is to build an entirely internally developed borer, currently code-named "Prufrock," that can dig at rates 10 times or "aspirationally 15 times faster than current boring machines" -- outracing a snail.

This would permit TBC to dig a tunnel from Los Angeles to San Francisco, for example, in just "a few weeks," and to underlay L.A. itself with a network of the hundreds of miles of tunnel that could make Loop a reality.

Accomplishing this goal requires multiple incremental advances, none of which are "rocket science" according to Musk. For example:

  • Utilizing Tesla (NASDAQ:TSLA) battery packs and Tesla electric motors to power the borer and "muck trains," instead of using diesel engines (which fill tunnels with noxious fumes) or high-voltage electrical power lines (which weigh a ton).
  • Installing a passing lane so that trains carrying away dug-out waste can operate in the same tunnel that a boring machine is digging.
  • Transforming that waste -- which companies ordinarily pay to have hauled away and dumped in a landfill -- into a useful commercial product, such as bricks, that can be sold for revenue, and/or into structural supports to shore up the tunnel.
  • Installing those structural supports along a tunnel as it is dug, to permit continuous digging.

Accomplishing this last goal alone, says Musk, could triple or quadruple the speed of digging. Eliminating the cost of waste ("muck") removal, meanwhile, could cut construction costs by 15% to 20%.

What it means to investors

Aiming for a near-term 100% to 200% improvement in digging speed, and a further 15% to 20% reduction in costs from waste removal, Elon Musk's Boring Company promises to drastically cut the cost of underground construction -- much like his reusable rockets at SpaceX have drastically cut the cost of space travel.

Investors, however, currently have even less opportunity to profit from Musk's breakthroughs in tunneling technology than they have from his renaissance in rocketry. TBC has attracted $112.5 million in capital to date (in addition to selling $1 million worth of hats and $10 million worth of not-a-flamethrowers). But according to data from S&P Global Market Intelligence, 90% of TBC's funding has come personally from Elon Musk himself, as the company's founder and CEO. The rest was attracted from qualified individual investors buying under a Regulation D private placement.

For the time being, TBC remains very much Elon Musk's pet project. It's also not a project of immediate importance to investors, as the tunnel-borer-manufacturing companies TBC will be competing with -- firms with names like Terratec, Herrenknecht, and Northern Heavy Industries Group -- are all also privately owned. This doesn't mean, however, that TBC has no implications for investors.

Over time, should TBC prove successful in drastically reducing the cost of boring, it would open the way to construction of Loops and Hyperloops within and between cities, decreasing the demand for both private automobiles (locally) and commercial airplanes (regionally). Even (much) farther out, a more economical means of boring tunnels should facilitate mining and colonization of the Moon, Mars, and the asteroid belt. Musk's mentioning that one key to reducing the cost of boring tunnels is reducing their diameter, for example, gets one thinking immediately about an ulterior motive -- ensuring that a boring machine can comfortably fit within the payload fairing of a SpaceX rocket.

As fast as Musk has moved to turn The Boring Company from a concept into a reality, it could still be a long time before the investing world begins to feel the first tremors of an impact from TBC. That won't, however, make it any less interesting of a story to follow.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends TSLA and TWTR. The Motley Fool has a disclosure policy.