the-boring-company-business-model

How Does The Boring Company Make Money? The Boring Company Business Model In A Nutshell

  • The Boring Company is an American infrastructure and tunnel construction services company founded by Elon Musk in 2016.
  • The Boring Company makes money by providing tunnel infrastructure and boring machine services. The company’s flagship project to date is the LVCC Loop in Las Vegas, with future expansion plans already approved.
  • While The Boring Company looks to secure deals with new partners, the company makes money through investment funding, merchandise sales, and funding from Musk himself.

The Boring Company Origin Story

The Boring Company is an American infrastructure and tunnel construction services company founded by Elon Musk on December 17, 2016.

The company came into being soon after Musk made a now-infamous tweet while stuck in heavy congestion in Los Angeles:

Traffic is driving me nuts. Am going to build a tunnel boring machine and just start digging…

Though many assumed flying cars would ease the traffic congestion of the future, Musk argued tunnels were a better option because they were weatherproof, out of sight, and minimized the amount of valuable land that would need to be sacrificed for transport corridors.

To bring Musk’s vision to life, The Boring Company developed Loop – a zero-emission, underground public transport system where passengers are transported to their destination without intermediate stops.

A three-station, 1.7-mile prototype was constructed in Las Vegas in 2019 after Musk acquired a tunnel-boring machine.

The prototype, dubbed the Las Vegas Convention Centre (LVCC) Loop, was constructed in just twelve months and reduced a 45-minute walk to approximately 2 minutes.

At the time of writing, there are also plans to connect the Las Vegas Strip with McCarran International Airport and Allegiant Stadium.

That same year, The Boring Company began assembling its proprietary boring machine named Prufrock.

The machine, which has the same diameter as a SpaceX Dragon spacecraft, is six times faster than conventional tunnel boring machines. A second Prufrock came online in August 2021.

The Boring Company’s revenue generation

The Boring Company makes money by providing tunnel infrastructure and boring machine services. 

The company is in its infancy, however, having only been spun off from SpaceX in 2018.

To some extent, there are also concerns from industry experts regarding the commercial viability of Musk’s ambitions.

Nevertheless, The Boring Company recently broke ground on a project connecting two Las Vegas Strip hotels to the existing LVCC Loop.

Longer-term, the aforementioned tunnel between the stadium and the airport has also reached the approval stage.

Several very preliminary discussions have also taken place with transport authorities in Australia, Europe, and China for potential projects there.

Operational funding

While Musk works to sell the benefits of his technology to interested parties, the billionaire entrepreneur is also responsible for keeping the lights on at The Boring Company.

In 2018, Musk committed $113 million of his own money to fund operations. The following year, he secured the first external investment in the company after selling $120 million in stock to multiple venture capital firms.

Musk also has made money for the company by selling a range of merchandise, including hats and fire extinguishers.

He also sold a branded flamethrower, with twenty thousand sold at $500 netting the company $10 million.

Read Next: PayPal Mafia, Zero to OneBlitzscaling, Elon Musk Companies, Who Is Elon Musk, PayPal Business Model.

Related To The Boring Company

Is Tesla Profitable?

is-tesla-profitable
Yes, Tesla has been profitable since 2020. Indeed, Tesla generated $862 million in 2020. And it further generated $5.6 billion in net income by 2021.

Tesla Production

tesla-production-numbers-by-year

Tesla Production vs. Delivery

tesla-production-vs-delivery

Who Is Elon Musk

who-is-elon-musk
Elon Musk, seen as one of the most visionary tech entrepreneurs from the Silicon Valley scene, started his “career” as an entrepreneur at an early age. After selling his first startup, Zip2, in 1999, he made $22 million, which he used to found X.com, which would later become PayPal, and sell for over a billion to eBay (Musk made $180 million from the deal). He founded other companies like Tesla (he didn’t start it but became a major investor in the early years) and SpaceX. Tesla started as an electric sports car niche player, eventually turned into a mass manufacturing electric car maker.

Who Owns Tesla

who-owns-tesla
Elon Musk, an early investor and CEO of Tesla, is the major shareholder with 21.7% of the stocks. Other major shareholders comprise investment firms like Baillie Gifford & Co. (7.7%), FMR LLC (5.3%), Capital Ventures International (5.2%), T. Rowe Price Associates (5.2%), and Capital World Investors (5%). Another major individual shareholder is Larry Ellison (co-founder and CEO of Oracle), with a 1.7% stake.

History of Tesla

history-of-tesla
Founded in 2003 by Eberhard and Tarpenning, eventually, the initial co-founders left the company, and by 2004, Musk first became the main investor. After that, by 2008, he took over as CEO of the company. Tesla would go through many near-death experiences until 2018. And yet, by 2021, Tesla will become a trillion-dollar company.

Tesla Business Model

tesla-business-model
Tesla is vertically integrated. Therefore, the company runs and operates the Tesla’s plants where cars are manufactured and the Gigafactory, which produces the battery packs and stationary storage systems for its electric vehicles, which are sold via direct channels like the Tesla online store and the Tesla physical stores.

Tesla Competitors

tesla-competitors
As an electric automaker and builder of sports cars and now trucks, Tesla’s competitors comprise companies like Ford, Mercedes-Benz, Porsche, Lamborghini, Audi, Rivian Lucid Motors, Toyota, and more. At the same time, Tesla is an electric energy production and storage company (SolarCity); it competes with Sunrun, SunPower, and Vivint Solar. And as an autonomous driving company, it competes with companies like Zoox, Waymo, and Baidu with self-driving software.

Real-Time Insurance

real-time-insurance
A real-time insurance business model enables Tesla to build its insurance arm by dynamically adjusting the premiums based on real-time driving behavior. Reduced insurance premiums hooked with the leasing arm enable Tesla to scale its demand side of the business.

Tesla Business Model

tesla-financials
In 2021, Tesla generated over $53.8 billion in revenues, compared to $31.5 billion in 2020. The largest segment in automotive sales (comprising regulatory credits revenues), followed by leasing (as part of the automotive), generated $1.6 billion in 2021. Outside automotive sales (non-warranty after-sales vehicle services, sales of used vehicles, retail merchandise, and more) accounted for $3.8 billion. And energy generation and storage accounted for $2.8 billion. US and China are the primary markets, with almost $24 billion and nearly $14 billion, respectively, in 2021. In 2021, Tesla generated $5.6 billion in Net Income, a net margin of over 10%.

How Does SpaceX Make Money

how-does-spacex-make-money
– SpaceX is a space transportation service and manufacturer of space rockets and other transport vehicles. Elon Musk founded it in 2002. – SpaceX makes money by charging governmental and commercial customers to send goods into space. These goods include ISS supplies, infrastructure, and people and satellites for various purposes. – SpaceX is also creating its Starlink network, designed to give every citizen access to fast and affordable internet.

Elon Musk Entrepreneurial Story

who-is-elon-musk
Elon Musk, seen as one of the most visionary tech entrepreneurs from the Silicon Valley scene, started his “career” as an entrepreneur at an early age. After selling his first startup, Zip2, in 1999, he made $22 million, which he used to found X.com, which would later become PayPal, and sell for over a billion to eBay (Musk made $180 million from the deal). He founded other companies like Tesla (he didn’t start it but became a major investor in the early years) and SpaceX. Tesla started as an electric sports car niche player, eventually turned into a mass manufacturing electric car maker.

First-Principle Thinking

first-principles-thinking
First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.

Read Also: Tesla Business Model, How Does Elon Musk Make MoneyElon Musk Companies, Who Owns TeslaTransitional Business ModelsTesla Competitors.

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