This article was updated on May 26, 2017, and originally published on April 21, 2014.

Science fiction is morphing into reality, as the U.S. Navy test continues to advance development of a new electromagnetic "railgun."

In April 2014, the Navy announced plans to test a prototype electromagnetic, or EM, railgun, a weapon that Rear Adm. Bryant Fuller, the Navy's chief engineer called "an incredible new offensive capability for the U.S. Navy." Initially, the Navy planned to test-fire the railgun at sea aboard a Joint High Speed Vehicle. Plans have since changed, and at present the Navy (and the Army too) are conducting their test-firings on land, with an eye toward moving immediately to naval deployment -- sans at-sea testing -- if all goes well.

Artist's rendering of electromagnetic railgun aboard Expeditionary Fast Transport USNS Millinocket (T-EPF3). Image source: U.S. Navy.

What it does

The Navy describes its railgun as "a long-range weapon that launches projectiles using electricity instead of chemical propellants." It works by utilizing an electromagnetic energy known as the "Lorenz Force" to rapidly accelerate and launch a projectile between two conductive rails, firing the projectile incredible distances, at incredible speeds.

The EM weapon can hit targets as far as 110 miles away, and, with shells traveling at speeds that could approach Mach 7 -- 4,600 mph -- the time between firing and "target destroyed" should be as little as 86 seconds.

Speaking of the shells, railgun-launched projectiles are only about 18 inches long. And because the projectiles themselves are so simple in design -- no explosive charge required, and no explosive warhead either -- they're cheap to get out, costing just $25,000 each. Relative to the price of a cruise missile with similar destructive power, which can cost in excess of $1 million, that's a bargain.

What it means to investors

Currently, two defense contractors have designed prototype EM railguns for the Navy: General Atomics (better known for its "drone" aircraft than for its cannon), and BAE Systems (NASDAQOTH:BAESY) (LSE:BA), the big British defense contractor. 

To date, the Navy has sunk at least $250 million into the EM railgun program. Plans are for a further $250 million to be invested in the weapon's development by the end of 2017. At present, BAE and General Atomics have to be considered the leading contenders to win these funds, along with further funding to manufacture production copies of the weapon if tests prove successful.

The bigger impact, of course, may be on the defense contractors not chosen by the Navy to build its railguns. If a $25,000 railgun projectile can do the same job, the case for buying $1 million-plus Tomahawk cruise missiles from Raytheon (NYSE:RTN), not to mention shorter-range Harpoons from Boeing (NYSE:BA), will become much harder to make.

That will be good news for taxpayers, certainly. But it could be bad news for Raytheon and Boeing. Raytheon's biggest revenue driver (albeit not its most profitable) is the company's Missile Systems division, which generated $7.1 billion in revenues, and $916 million in operating profits, for the company in 2016. Boeing, meanwhile, is seeing its defense business depend more on the production of missiles and other weapons systems, as the company's historic dominance in military fighter aircraft wanes.

The key to preserving revenues for both companies may come down to a little-known Office of Naval Research program dubbed the "Hyper Velocity Projectile." Railgun projectiles may be faster and cheaper than a missile, but for now, missiles still retain one key advantage over cannon-shells -- whether rail-launched or otherwise -- in that missiles are guidable to their targets. This improves their accuracy, meaning fewer munitions need to be fired to ensure a target's destruction -- and carries less risk of collateral damage besides. What the HVP program aims to do is design a projectile that can hold up against the stresses of a Mach-speed railgun launch, and also carry the delicate, and miniaturized, instrumentation that enables the munition to be guided to its target with precision accuracy.

The company that designs this projectile may well become the real winner of the race to railguns.

Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.