The financial pickle facing Elon Musk’s Las Vegas Loop system – TechCrunch

Restrictions put in place According to Nevada regulators, it is difficult for The Boring Company to meet contractual targets for its LVCC loop, Elon Musk’s first underground transportation system.

The Las Vegas Convention Center (LVCC) Loop System is expected to use more than 60 fully autonomous high-speed vehicles to transport 4,400 passengers per hour between showrooms. However, TechCrunch has learned that Clark County regulators have so far only approved 11 human-driven vehicles, set strict speed limits, and banned the use of on-board collision avoidance technology that part of Tesla’s “fully autonomous drive” autopilot. advanced driver assistance system. Tesla’s autopilot system technically does not reach the level of full autonomy, even though it is labeled as such. It is considered – even internally, according to exchanges between Tesla and California regulators – as an advanced driver assistance system that can automate certain functions.

LVCC’s parent body, the Las Vegas Convention and the Visitors Authority, created a contract to entice Musk and ensure that promises are kept. The contract is a fixed price and TBC must meet specific milestones to receive all of its payments. The contract provides for payments at different stages of the process, such as the completion of the bare tunnels, the entire working system, the finishing of a test period and safety report, then demonstrate that it can carry passengers. The last three milestones relate to the number of passengers it can carry. If the loop can demonstrate moving 2,200 passengers per hour, TBC will get $ 4.4 million, then the same payment again for 3,300 passengers, and the same for 4,400 passengers per hour. Together, these capacity payments represent 30% of the fixed price contract.

Instead of moving more than 4,000 passengers per hour, the constrained system could limit capacity to less than 1,000, exposing The Boring Company (TBC) to heavy penalties for failing to meet contractual targets. TBC does not generate revenue by charging passengers. The rides are free.

For example, at a large show like CES, the LVCC will pay TBC $ 30,000 for each day of operating and managing the system, according to a management agreement recently obtained by TechCrunch. However, the original contract signed by TBC in 2019 provides for a penalty of $ 300,000 for each large convention where TBC cannot move around 4,000 people per hour.

This means that over the course of a three or four day event, TBC could lose hundreds of thousands of dollars, beyond the cost of running the system. In a typical pre-pandemic year, LVCC would host a dozen such great shows. It is not known if TBC is considering another way of making money, such as income from advertising in its cars.

This capacity issue is already costing TBC money. The contract states that if TBC misses its performance target by such a margin, Musk’s company will not receive more than $ 13 million from its construction budget. The convention center authority confirmed to TechCrunch that, per its contract, it is withholding these construction charges until TBC can demonstrate that it is moving thousands of people per hour.

The smaller shows, numbering about 20 per year, incur no capacity penalties but earn TBC a much lower fee of just $ 11,500 per day, according to the agreement. TBC also receives a monthly payment of $ 167,000 to keep the system running, regardless of the number of outstanding agreements.

A loop capacity test this week would only have involved 300 people; an official at the Convention Center said the figure of 4,400 people per hour was “well in our line of sight.”

In addition to its team of human drivers, TBC must staff an operations center, maintenance and recharging facility, and provide uniformed customer service personnel, security personnel and a full-time resident manager, according to the management agreement.

The pricing structure is expected to be renegotiated – likely downward – by the end of 2021, to incorporate the “expected transition to autonomous vehicle operations”.

Image credits: Ethan Miller / Getty Images

Collision alerts

Some of the restrictions on the initial operation of the loop came from the Clark County Building and Fire Department. These would include an overall speed limit of 40 mph, dropping to 10 mph at each of the three stations on the loop, and a restriction to just 11 vehicles.

Clark County Fire Department Deputy Fire Chief Warren Whitney said TBC told him the company was not allowed to use Tesla’s collision warning systems in the loop. A transportation system certificate issued by Clark County this week clarified that the loop must use “non-autonomous” “manually driven” vehicles. It was issued for the 62 vehicles planned. Neither Clark County officials nor TBC have provided answers to detailed questions about the operational restrictions, nor indicated when or if they could be lifted.

Toyota has previously warned that its radar collision warning system may not work properly in tunnels.

It is not clear whether the Teslas are able to operate safely and “fully autonomous” without their collision warning radars, although Musk has suggested – and now executed on a plan – removing the radar sensors from his. vehicles and use only cameras. Tesla began shipping Model 3 and Model Y vehicles in May that lack radar sensors. The lack of radar sensors prompted the National Highway Traffic and Safety Administration to declare that Model 3 and Y vehicles built on or after April 27, 2021 will no longer receive the agency’s checkmark for automatic emergency braking, the Forward collision warning, lane departure warning and dynamic brake assist. the move also prompted Consumer Reports to no longer list the Model 3 as a top pick, and the Insurance Institute for Highway Safety said it plans to remove the Top Safety Pick + designation from the Model 3.

The fire department was also concerned about handling emergencies in the tunnels, including battery fires that could last for several hours. “There have been instances where electric cars have caught fire without an accident,” Whitney told TechCrunch. “Our plan for now would be to just get people out and then back off and let the fire continue to burn.”

Whitney noted that the system has numerous cameras and smoke detectors, as well as a “heavy-duty” ventilation system that can move 400,000 cubic feet of air per minute back and forth through tunnels. This should allow passengers and drivers to escape on foot around the cars. For less serious incidents, TBC has a tow vehicle (also a Tesla) to extract broken down cars.

Neither TBC nor Clark County responded to questions from TechCrunch on whether the loop would be allowed to carry wheelchair users, children or infants typically requiring car seats, people with other issues. mobility or pets and support animals.

Firefighters have already carried out multiple exercises in the underground system, including simulated accidents far from a station, with two or three other vehicles on the way. “Eleven cars is totally doable,” says Whitney. “But when you start to increase the number of cars, it can be a problem. [TBC] is a for-profit company and is going to want to maximize efficiency, so there might be further discussions as they try to increase capacity.

Expansion projects

Not only does TBC want to use more vehicles in the existing loop, it is already planning to expand the system. In late March, TBC told Clark County that it had inaugurated an extension of an LVCC station at the new Resorts World hotel, and that it had permission to create a spur similar to the Encore nearby.

More importantly, TBC also wants to build a public transportation system covering much of the Strip and downtown Las Vegas with more than 40 stations connecting dozens of hotels, attractions and ultimately the airport. . This system would be funded by TBC and supported by ticket sales.

The viability of these extensions could depend on how quickly TBC can deliver on the technological and operational promises it has made for its relatively simple LVCC loop, and demonstrate whether taxis in tunnels can generate as much revenue as column inches. .

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