Two US Hyperloop Startups Line Up Financing From China (bloomberg.com)

Los Angeles startups Arrivo and Hyperloop Transportation Technologies have reportedly secured financing from Chinese state-backed companies. "Lining up potential funding helps solve one of the biggest obstacles for hyperloop systems: They will be extremely expensive to build," reports Bloomberg. From the report: Arrivo, founded by a former senior engineer at Elon Musk's Space Exploration Technologies Corp., said it secured a $1 billion credit line with Genertec America Inc., a subsidiary of a Chinese state-owned entity based in Beijing that has helped finance and build high-speed rail and other infrastructure projects in Iran, Turkey and elsewhere. The credit line will go to backers of a future project using Arrivo technology, not to the startup itself. [The Genertec debt could be used to construct a project using the company's technology anywhere in the world, not necessarily in China.] Separately, Hyperloop Transportation Technologies said it plans to work on a 10-kilometer test track in Tongren, part of China's Guizhou province, at an initial cost of about $300 million. State entity Tongren Transportation & Tourism Investment Group will provide half the funds and seek private investors for the other half, HyperloopTT said. The precise route is yet to be determined.

Comments

Re:It's a trick. Get an axe.

[Rei]

Not sure that there's much tech to steal. Both of these companies - unlike the original Hyperloop Alpha design from SpaceX, which was an air-bearing train in low-pressure air - are pursuing vactrains (maglev, hard vacuum). China already has plenty of experience with maglev.

I wonder if it's some kind of investment scam

[Build6]

Does anyone remember the "elevated bus" project, which was supposed to drive on existing roads "over" existing traffic? That turned out to be an investment scam ( https://www.wired.co.uk/articl... ). The key element is something "futuristic/high technology" that (and this is the main element here) involves raising a lot of money. Once that is done it's already a success, they don't actually have to do more than make some kind of show of building something.

I don't think hyper loops are real-world feasible. Even if the technology works, any aggrieved destructive fool - and these exist everywhere in the world, China included - can put the entire system at risk in a way that aircraft are not threatened by. It's easier to guard an airport in such a way that man-portable missiles are out of range of aircraft taking off/landing, than it is to guard the entire length of some long-distance piped network that basically needs to maintain vacuum sealing in its entirety. "Normal" high speed rail is going to be less dangerous/easier to guard than hyper loops, unless they are going to bury the entire thing underground, which will drive costs up, which makes aircraft more competitive.

One thing about design that gets overlooked is, you don't just look at "is it good if it works?", you also need to look at "what happens when something goes wrong?". There are more failure modes for hyper loops where "everybody dies" than there are for aircraft and trains. Even if it exists, you're going to be taking a much greater risk getting in one than alternative transportation methods.

Re: It's a trick. Get an axe.

[Rei]

"Hard vacuum and soft vacuum are terms that are defined with a dividing line defined differently by different sources, such as 1 Torr,[42][43] or 0.1 Torr,[44] the common denominator being that a hard vacuum is a higher vacuum than a soft one."

Re, Germany: Or, we can actually describe the real situation: Germany tried to help its local brands vs. Tesla by setting a limit on their EV subsidy at just below the price of a Model X. Tesla modified the Model X pricing structure in Germany so that a number of standard features (which most everyone would want) became optional, lowering the base price, but could be added back on via an option. Germany, responding to claims that the company wasn't actually selling the base version, dropped Tesla from their list of approved vehicles. Tesla counterclaimed that they do in fact sell the base version, and have more to the point delivered some; that it's just not very popular. Germany booted Tesla nonetheless. Tesla is paying for the subsidies for buyers that are being denied them, while it files an appeal with German regulators.

Re, cobalt: First, Tesla uses far less cobalt per kWh than its competitors. Its cathodes in its current 2170 cells (Model 3, powerpacks, etc) are less than 3% cobalt, while most manufacturers are struggling to achieve 10% in their next gen cells. Beyond that, though, this is an issue that was entirely initiated by Panasonic (a supplier of 18650 cells to Tesla, the type used in the Model S and Model X). Panasonic, discovering that the supplies of Sherrit International (a Canadian company) contained some intermingled Cuban cobalt, contacted the US Treasury Department for advice. Based on the feedback they received, they dropped Sherritt as a supplier.

Amazing the things you make a "scandal" out of. The latter one in particular: it's ridiculous that a Japanese company, making cells in Japan, because one minor component it uses is purchased from a Canadian company, and some small fraction of their cobalt comes from Cuba, from mines not associated with human rights problems, they have to stop all purchases of cobalt from said Canadian company, because the US has a half-century-old spat with Cuba.

Re:What a risk.

[hey!]

First of all, this is credit, not investment. It's a different game, because if things go belly up as creditor you're at the head of the line to be repaid; as an owner you're at the tail. I've seen deals where creditors moved in, took over IP and other assets put up as collateral, and started up successful companies without the debt burden the technology's creators were operating under. Unless the other investors or owners can come up with a huge bag of cash immediately, they end up with nothing.

If you've got deep enough pockets, being the largest creditor could be a better way to obtain the fruits of a startup's labor than buying an ownership position.

Also, even if this were taking an ownership stake in the company, China as a nation with 1/5 of a world's population is in a different position than an individual investor, who should be focused on future profits. China is playing a minimax strategy where the payoff is national power, not money. An individual who invests out of fears of "missing out" is being irrational; a nation may be choosing to hedge its bets in a very different game. And as a sovereign state China can simply do things that would be illegal for an individual, so the rules of the game it's playing look very different.