SpaceX investors are reportedly beginning to question the company’s investment in one of Elon Musk’s pet projects, tunnel construction firm The Boring Company.
The Wall Street Journal reports that as Elon Musk’s firm The Boring Company prepares to reveal a test tunnel in Hawthorne, California, many investors attached to another of his companies, SpaceX, are questioning the space exploration firm’s investment in The Boring Company. The California tunnel is reportedly being constructed with equipment purchased with SpaceX funds, and being assisted by SpaceX employees, something which has reportedly alarmed investors, including Peter Thiel’s Founders Fund.
As SpaceX investors looked into the arrangement between SpaceX and the Boring Company, they discovered that despite SpaceX’s diversion of resources and staff to the Boring Company, it was Musk who was likely to receive almost all future profits from the firm. Investors then began to question why money they invested in a space exploration company which promised to launch rockets and satellites was now being used to finance the construction of an underground tunnel, with the majority of profits from the project benefiting Musk due to his 90 percent equity ownership in The Boring Company.
The SpaceX board reportedly never voted on diverting funds to the Boring Company and have reportedly begun debating what to do about the situation. Since then, The Boring Company has given SpaceX approximately six percent of the company’s stock, “based on the value of land, time and other resources contributed since creation of the company,” a SpaceX spokesperson said.
The Boring Company’s Hawthorne test tunnel is due to be unveiled this week, the research and development project spans across two miles starting at the SpaceX parking lot. Musk previously stated via his old Instagram account: “Pending final regulatory approvals, we will be offering free rides to the public in a few months.” But, due to high demand tours of the tunnel are reportedly now “invitation only.”
Musk promised in a tweet that the unveiling would feature more than just a tunnel, but would include “modded but fully road legal autonomous transport cars & ground to tunnel car elevators.”
Boring Company product launch on Dec 18. More than a tunnel opening. Will include modded but fully road legal autonomous transport cars & ground to tunnel car elevators.
— Elon Musk (@elonmusk) December 7, 2018
The Boring Company is likely hoping for a big PR win with the new product launch after multiple setbacks in recent months. TechCrunch reported in November that the company abandoned their plans to construct a tunnel beneath Los Angeles’ 405 freeway and Sepulveda Boulevard after local lawsuits aimed at investigating the potential environmental impact of the project were filed by local groups. The company aimed to fast-track the 2.7-mile long tunnel and had the backing of city officials to do so, but will no longer move forward.