Skip to content

Inside the Demise of Hyperloop One: How the Ultrafast Transportation Startup Hit a Dead End

    Hyperloop One, the once high-flying startup aiming to revolutionize transportation with ultrafast passenger pods, announced this week that it is shutting down operations after over 7 years in business. The news marks a stunning fall for the company that had raised over $400 million to pursue Elon Musk‘s vision of propelling riders through low-pressure tubes at speeds of over 600 mph.

    So what ultimately caused Hyperloop One to hit the brakes on its wildly ambitious plans? As an expert in emerging transportation technology, I believe the company‘s demise underscores the immense challenges of bringing moonshot innovations to commercial viability. Let‘s take a closer look at some of the key factors that derailed the hyperloop pioneer‘s dreams.

    Burning Through Cash Without a Clear Path to Revenue

    Like many audacious Silicon Valley startups, Hyperloop One‘s business model was predicated on a "build it and they will come" mindset. The company bet that developing a working hyperloop prototype would unlock massive demand from passengers and cargo shippers eager for a faster, cheaper alternative to existing modes like rail, air travel, and trucking.

    But building a transportation system based on magnetic levitation, vacuum-sealed tubes, and propulsion technology that had never been used for commercial transit proved far more complex and costly than even Hyperloop One‘s deep-pocketed investors anticipated.

    Industry experts estimated that even a small-scale hyperloop demo connecting two cities would cost upwards of $10 billion to construct—more than 20 times what Hyperloop One was able to raise in private capital. With no government funding secured and ticket revenue still many years away, the company was burning through hundreds of millions per year to keep its R&D and engineering work moving forward.

    As one senior executive admitted to The Verge in 2019: "The biggest challenge is and will continue to be having investors who are patient enough for a 10-year-plus development pathway towards a new transportation mode." Ultimately, even the company‘s most supportive backers grew wary of the ever-expanding timelines and budget requirements to bring the hyperloop vision to fruition.

    The Intense Physics of Hyperspeed Travel

    The core premise of the hyperloop—shooting passenger pods through nearly airless tubes at velocities faster than a cruising 737—has an undeniable sci-fi allure. But beneath the futuristic veneer lie some extremely daunting engineering obstacles that Hyperloop One was still far from overcoming.

    Traveling at such unprecedented speeds generates intense g-forces that pose major risks to passenger safety and comfort. Turning, stopping or any sudden deceleration would be physically intolerable for human riders if pods were moving above 500-600 mph. Maintaining a stable levitation system across uneven terrain, varying weather conditions and microscopic track imperfections represented an equivalently complex controls challenge.

    As physicist and blogger Sabine Hossenfelder explains: "The physical limitations are actually the easy part. Much harder to overcome are the engineering challenges of keeping a several hundred kilometer track alignment stable to fractions of a millimeter while the ground shifts, buildings settle, and other environmental disturbances occur."

    To be clear, the hyperloop is not defying any laws of physics. But from power electronics to air compression to vibration mitigation, virtually every technical component demanded major leaps beyond current engineering knowledge. Hyperloop One sunk hundreds of millions into advancing the state of the art, but was still many years away from a commercially viable system by the time it ran out of runway.

    Governments and Policymakers Struggled to Get On Board

    The hyperloop‘s novelty and complexity also posed major challenges on the regulatory front. In the US and abroad, no clear permitting or oversight frameworks exist to govern the testing and commercial deployment of an entirely new transportation mode.

    At the federal level, neither the Federal Railroad Administration nor the Federal Transit Administration have clear jurisdiction over a vacuum tube-based transit system. Securing certification for the safety and security of hyperloop operations would require an extensive rulemaking process involving multiple agencies and potentially even Congressional action.

    Environmental review and right-of-way acquisition for cross-state or cross-country hyperloop routes would be equally fraught. The tubes would require long stretches of flat, straight alignment to maintain velocity, making many geographies simply infeasible to build. Eminent domain laws for surface transportation infrastructure are still largely untested for a system that more closely resembles an aircraft in an enclosed tunnel.

    As one former Department of Transportation regulator told Wired: "I think it‘s going to be very difficult to do an interstate hyperloop system…Our constitution just isn‘t set up for that. It‘s really an 18th-century document trying to govern a 21st-century technology."

    With such regulatory headwinds, Hyperloop One struggled to secure definitive commitments from government partners to pursue commercial routes. Despite inking exploratory agreements with officials from Ohio to Dubai, no jurisdiction was ready to navigate the legal and bureaucratic labyrinth required to approve the first hyperloop track.

    A Tough Sell for Passengers and Shippers

    But even if Hyperloop One had managed to clear its technical and regulatory hurdles, it faced a steep uphill climb to persuade passengers and cargo shippers to hop aboard.

    The company‘s core value proposition—faster intercity trips at a lower price than air travel—looked compelling on paper. But surveys consistently found tepid public enthusiasm for being an early adopter of an unproven transit mode. One UK government study estimated that only around 17% of consumers would be willing to ride in a hyperloop during the first 1-2 years of operations.

    On the freight side, Hyperloop One was promoting the potential for its pods to disrupt short-haul air cargo and long-haul trucking. But major logistics operators expressed heavy skepticism that vacuum tube transport would be cost-competitive with existing modes. The requirements for point-to-point routes, station infrastructure, capsule capacity, and loading/unloading speed posed major limitations compared to the flexibility of road and air freight.

    As FreightWaves writer Chad Prevost put it: "The most obvious use case is high-value, time-sensitive cargo on high-volume routes, but that‘s an extremely limited market…The problem is, there are very few Origin-Destination pairs in the world that have enough freight to justify the cost of a hyperloop system."

    Taken together, the demand concerns raised serious doubts about the technology‘s path to profitability, even under highly optimistic adoption scenarios. Without clear signs of a viable customer base, Hyperloop One‘s investors ultimately lost confidence in its commercial potential.

    Leadership Turmoil and a Crisis of Confidence

    Against such daunting financial, technical and regulatory obstacles, Hyperloop One might still have been able to push forward if not for signs of deepening internal disarray. The company‘s short history was marked by a number of high-profile executive shakeups and public spats that shook investor and partner faith in its capacity to deliver on its lofty ambitions.

    In 2016, the company became embroiled in a messy legal battle with co-founder and chief technology officer Brogan BamBrogan, who left the company and sued the remaining leadership team for breach of fiduciary duty, violating California labor law, and mismanaging funds. The litigation aired embarrassing allegations of nepotism, harassment and financial misconduct by Hyperloop One executives.

    While the lawsuit was eventually settled, the reputational damage and loss of a key technical leader appeared to stall the company‘s momentum at a critical juncture. More worryingly, it likely spooked investors about the judgment and competence of Hyperloop One‘s senior team to steer a project as complex as inventing a new mode of transportation.

    Josh Giegel, the company‘s other co-founder and longtime engineering chief, stepped down from his day-to-day duties last year, transitioning to an advisory role on the board. As the driving force behind much of Hyperloop One‘s technical progress, Giegel‘s move to the sidelines signaled that the company‘s pace of innovation was decelerating rapidly.

    With its financial lifelines and engineering leadership eroding, Hyperloop One‘s remaining executives finally admitted defeat this week. Barring a surprise injection of capital or an acquirer willing to roll the dice on the hyperloop dream, the company is now headed towards a complete wind-down.

    Piercing the Hype Around Unproven Technologies

    So what lessons can we draw from Hyperloop One‘s once-lofty trajectory and sudden crash? As an AI researcher working on cutting-edge technologies, I believe the company‘s story underscores both the limits of Silicon Valley disruption and the enduring difficulties of transportation innovation.

    Revolutionizing transit is an inherently hardware-intensive, capital-intensive, long-lead challenge that fits uneasily with the fail-fast ethos of software startups. Where a consumer app can be rapidly prototyped and scaled on existing infrastructure, building a new transportation network from the ground up requires fusing multiple complex systems in heavily regulated physical environments.

    Hyperloop One managed to generate immense hype around the technical and economic potential of its eponymous concept. But it failed to grapple with the profound economic, regulatory and cultural barriers to making the vision a commercial reality anytime in the near future.

    As scientist and hyperloop skeptic Phil Mason argues in a detailed technical critique:

    "The Hyperloop is not about innovation or disruption; it‘s about the challenges of selling an idea that appeals to emotion but lacks a basis in science, has insurmountable engineering obstacles, and has a completely impractical business model. It‘s a story of exaggerations, misrepresentations, and over-promises."

    Mason‘s view may sound harsh, but I believe it offers an important counterpoint to the breathless boosterism that often accompanies speculative technologies. For every legitimate breakthrough that captures the public imagination, there are dozens of long-shot ideas that fail to pan out as promoted.

    At its core, the hyperloop was always more of a seductive thought experiment than a workable transportation solution. Its sci-fi promise generated understandable excitement, but hand-waving away its immense practical hurdles served no one in the end.

    As Hyperloop One‘s employees pack up their desks and investors tally their losses, the company‘s demise should stand as a cautionary tale about allowing hype to race too far ahead of reality. And it should remind us that even in an age of exponential technologies, solving real-world problems still requires grappling with real-world constraints.

    The hyperloop dream isn‘t necessarily dead, but the route to making it a viable transit option will be far longer and bumpier than its early evangelists were willing to admit. For now, the rest of us should focus our attention on less glamorous but more achievable ways to move people and goods faster, safer and cleaner.

    As an AI expert, I remain optimistic about the power of emerging innovations to reshape virtually every domain of our economy and society. But I also believe we must remain clear-eyed about the gap between soaring visions and engineering realities. Pioneering unproven technologies demands a rare mix of out-of-the-box creativity and hard-nosed pragmatism.

    Hyperloop One bet big on a concept that seemed to defy the limits of current transportation paradigms. But in the end, no amount of Silicon Valley ingenuity and venture capital could suspend the laws of physics or the logic of economics. For high-speed transit and other moonshot ideas, the journey from blueprint to boarding gate still requires navigating some irreducibly heavy headwinds.