Elon Musk has quietly created another unicorn

Beyond electric vehicles, rockets and artificial intelligence, Elon Musk has another company that has received far less public attention.

It does not manufacture chips, train large language models, or reshape consumer electronics. What it does may even sound rather traditional: digging tunnels.

This company is called The Boring Company.

Recent market sources show that this tunnel-digging startup founded by Musk is in talks for a new funding round of approximately 4 billion U.S. dollars, which could value the company at 20 billion U.S. dollars. If the deal is finalized, it will mean that The Boring Company has achieved substantial growth in just a few years compared to its 5.7 billion U.S. dollar valuation back in 2022.

This valuation is unusual for an infrastructure enterprise. Traditional tunnel projects are usually characterized by long cycles, high costs and complex regulatory requirements. What The Boring Company is trying to do is redefine underground transportation with the methodology of tech companies: cut down tunnel construction costs, improve construction efficiency, and solve urban congestion problems through underground networks.

Of course, the company is still far from the "era of underground highways" that Musk originally envisioned. Today, its most mature project is still only an underground passage in Las Vegas; at the same time, the company has also drawn regulatory scrutiny over construction safety and environmental protection issues.

But the capital market seems to be taking a fresh look at this company.

Because the story behind The Boring Company is far more than just "digging tunnels". It follows Musk's consistent business path: starting from a seemingly crazy problem, leveraging technology and capital to continuously push forward a yet-to-mature future market.

Betting on an Unpopular Track

One day in December 2016, Musk was caught in a severe traffic jam in Los Angeles.

For ordinary people, a traffic jam may just be a bad commute experience, but for Musk, it became a new business inspiration.

"Why do roads have to be built on the ground?"

This is the starting point for the birth of The Boring Company.

At that time, Musk had already proven his ability to transform traditional industries through Tesla and SpaceX. But compared to electric vehicles and aerospace, urban traffic congestion seems to be a much trickier problem.

The urban population keeps growing while road space is limited. Adding more ground roads will bring higher land costs, urban planning pressures and environmental burdens, while building subways faces problems such as huge investment and extremely long construction cycles.

The answer Musk came up with is: move the transportation system underground.

The original goal of The Boring Company was not to build subways in the traditional sense, but to create a low-cost, high-efficiency underground transportation network. The company envisions that with a large number of parallel underground tunnels, vehicles can run at high speed underground, thus bypassing ground traffic congestion.

This idea does not sound new. Underground transportation has existed in the history of human urban development for more than a hundred years, but Musk believes that what really restricts the development of underground transportation is not lack of demand, but excessive cost.

The high cost of traditional tunnel construction mainly comes from several aspects: the requirement for huge tunnel diameters, complex construction processes, and expensive tunneling equipment.

Therefore, The Boring Company has proposed a completely different line of thinking.

On the one hand, the company tries to reduce the tunnel scale. Compared with traditional subway tunnels that need to accommodate large trains, the tunnels designed by The Boring Company are mainly for small vehicle transportation, which can greatly reduce construction difficulty.

On the other hand, the company hopes to improve tunneling speed and reduce costs by upgrading tunnel boring machines.

In Musk's business logic, the problem with many industries is not that the required technology does not exist, but that the cost structure has not been redesigned.

What Tesla did to transform the automotive industry is essentially redefining the cost curve of electric vehicles; what SpaceX did to transform the aerospace industry is to reduce launch costs through rocket recycling. The Boring Company is following the same methodology: identify a long-existing but inefficient industry, then recalculate the economic equation through engineering innovation.

However, in the early days of its establishment, public evaluations of The Boring Company were not positive.

Because there are huge differences between the infrastructure industry and the technology industry.

Software companies can iterate rapidly, and users can update products online, but underground engineering involves land, approval, safety, construction and government coordination, and its progress is far slower than that of the internet industry.

Therefore, when The Boring Company proposed to build an underground transportation network covering the entire city, many people thought it was just another bold futuristic idea of Musk, rather than a project that could be commercialized in the short term.

But as the project advanced, the company gradually found its feasible foothold.

It did not start by challenging megacities like New York and Los Angeles, but chose a scenario that was easier to implement: Las Vegas.

This place became the first testing ground on The Boring Company's path to commercialization.

Prototype of Business Model

If The Boring Company at its founding was more like an experiment for future cities, the Las Vegas project is its first proof to the market that underground transportation is not just a concept.

In 2019, The Boring Company won the project contract from the Las Vegas Convention Center to build an underground transportation system. The project was officially put into operation in 2021 and named LVCC Loop.

This is the most representative commercial project of The Boring Company to date.

The entire system consists of underground tunnels, and passengers can travel between different stations via Tesla vehicles. Compared with traditional subways, the scale of LVCC Loop is very limited, but it verified The Boring Company's core business logic: using underground space to realize point-to-point transportation at lower costs.

In terms of results, this system has not fully realized the "underground highway" that Musk envisioned in the early days. Vehicles are still driven manually, and the transportation capacity cannot compare with that of traditional subways. But for a startup company, the great significance of LVCC Loop does not lie in its scale, but in the fact that it has proven a new path for infrastructure construction.

Traditional urban transportation construction usually adopts a government-led model. For example, subway projects require long-term planning, approval, financing and construction, and the construction cycle is often counted in decades. The Boring Company, by contrast, tries to explore another path: enterprises propose solutions, cooperate with cities or commercial institutions, and build small-scale underground transportation networks according to specific needs.

This model is closer to the product iteration logic of technology companies: first find a clear scenario, complete small-scale verification, and then gradually replicate and expand. This is also an important reason for The Boring Company's valuation growth in recent years.

What investors see is not just a Las Vegas tunnel, but a replicable infrastructure business model. At present, The Boring Company has announced plans to promote underground transportation projects in more cities, including markets such as Nashville in the United States and Dubai in the United Arab Emirates.

International cities like Dubai, in particular, have natural demand for underground transportation systems. On the one hand, the urban population continues to grow, and the problem of road congestion is prominent; on the other hand, the government has a high degree of acceptance of new infrastructure and future city concepts.

If The Boring Company can successfully land its projects in more cities, its commercial value will no longer be limited to a single engineering project, but may evolve into a set of replicable urban transportation solutions.

However, the development of The Boring Company has also been accompanied by controversies.

The biggest challenge in the infrastructure industry is not coming up with an innovative concept, but completing the construction in the real world.

In the past few years, the company has drawn attention over construction safety issues. Reports say that some construction workers of The Boring Company have suffered serious injury accidents. Meanwhile, Nevada regulators have also stated that the company has a large number of environmental protection violations, including problems in waste disposal and construction management.

These controversies actually reflect the core contradiction facing The Boring Company.

Musk is good at challenging traditional industries with the methods of the technology sector, but the infrastructure industry is not a field that can be transformed purely through technological innovation.

In the automotive industry, Tesla can drive consumers to embrace new energy vehicles through optimized product experience; in the aerospace sector, SpaceX can reduce launch costs through technological breakthroughs. But underground engineering involves urban planning, public safety and government regulation, and every step requires compromise with the real world.

Therefore, whether The Boring Company can become a truly large-scale infrastructure enterprise in the future does not depend on whether it can dig more tunnels, but on whether it can build a stable, efficient and scalable replicable business model.

So far, it has taken the first step.

Extensive Investment Footprint

The story of The Boring Company is actually an epitome of Musk's business landscape.

Over the past two decades, Musk has continuously entered industries that seem unsuitable for entrepreneurs to step into.

In 2002, he founded SpaceX, challenging the aerospace industry that had long been dominated by government agencies and traditional aviation giants; in 2004, he joined Tesla, pushing electric vehicles from niche products to the mass market; in recent years, he has set his sights on artificial intelligence, brain-computer interface and social platforms.

All these industries share one common feature: huge market size, but long considered impossible to disrupt.

The Boring Company is no exception.

On the surface, tunnel excavation is a highly traditional industry. It does not have the rapid growth of internet companies, nor the huge technological imagination space of artificial intelligence companies.

But in Musk's view, there are also opportunities for efficiency revolution in the infrastructure sector.

His investment logic has always revolved around one core question: if an industry has not seen obvious changes for decades, does that mean there is an opportunity to redesign it?

Tesla redesigned the automotive industry chain, SpaceX redesigned rocket manufacturing and launch processes, and The Boring Company is trying to redesign urban transportation infrastructure.

This is also why the capital market is willing to give The Boring Company a relatively high valuation. The 20 billion U.S. dollar valuation is not calculated based on the profitability of a traditional engineering company, but is more of a bet on the new market that may take shape in the future.

If cities become more crowded in the future and the demand for underground space development continues to rise, The Boring Company is likely to become a key player in this trend.

Of course, there are also risks in this valuation logic.

Enterprises under the Musk banner have long had a distinct "future narrative" feature. Investors are often willing to pay in advance for the future, but what ultimately determines the value of an enterprise is its ability to deliver commercial results.

Over the past few years, Tesla has experienced production capacity crises, and SpaceX has also faced long-term capital pressure. Many of Musk's projects have gone through the process from being questioned to being verified.

The Boring Company is currently at a similar stage.

It has proven that it can build underground tunnels, but there is still a long way to go before it forms a large-scale commercial network.

Urban transportation infrastructure is not a single technical issue, but a complex system involving governments, capital, land, population and public policies.

In the next few years, for The Boring Company, the truly important question is not how much more financing it can raise, but whether it can turn "one of Musk's bold ideas" into an enterprise that can continuously generate revenue and profits.

If it succeeds, The Boring Company may become another important part of Musk's business empire. If it fails, it will still be one of the many explorations of "Musk-style future projects". But regardless of the outcome, this company embodies Musk's most distinct business trait: he does not always choose the markets that are easiest to make money, but the industries where he believes changes are bound to happen in the future. What The Boring Company bets on is exactly another possible form of future cities.

Beyond electric vehicles, rockets and artificial intelligence, what Musk is trying to transform is also the land under human feet.

This article is from the WeChat official account "Rongzhong Finance" (ID: thecapital), written by Lyu Jingzhi, edited by Wu Ren, and published with authorization from 36Kr.