Over 100 staff axed as Virgin Hyperloop abandons plan for passenger transport, in favour of freight or cargo transportation
Bad news for staff at Los Angeles-based Virgin Hyperloop, which last week announced it has axed half of its staff.
The Financial Times reported that the American firm laid off 111 people last Friday, as it refocuses on delivering a freight version of the experimental transport system, which propels pods through low-pressure tubes at speeds of up to 670mph.
Two of the people who lost their jobs told the FT that the lay-offs were announced via video conference. One said the scale of the cuts was “definitely not expected”.
“It’s allowing the company to respond in a more agile and nimble way and in a more cost-efficient manner,” Virgin Hyperloop told the FT.
“These types of decisions are never taken lightly.”
The company is “changing direction”, it added. “It really has more to do with global supply chain issues and all the changes due to Covid.”
Virgin Hyperloop said the logistics market had changed “dramatically” and that it was responding to strong customer interest in a cargo-based service.
In late January, Virgin Hyperloop announced it had hired Pierre Chambion to VP of Engineering and Head of Technology, as the company prepares to launch cargo solutions by the mid-2020s.
The scale of the job cuts are nevertheless surprising, considering that it was only in November 2020 when the firm demonstrated its first crewed test-track journey, after two company staff (co-founder and CEO Josh Giegel and Sara Luchian) acted as passengers in Virgin’s Experimental-Pod-2 (XP-2).
Josh Giegel left the firm last year, which triggered internal turmoil, the FT reported.
Sara Luchian meanwhile still seems to be the ‘Head of Passenger Experience” according to her LinkedIn profile on Tuesday.
In August 2021, Virgin Hyperloop released a glossy promotional video touting how its ‘zero emission’ passenger pods would operate. The Virgin Hyperloop CGI video showed separate passenger pods that could carry up to approximately 30 people, connecting to form a train.
The pods then travelled in a convoy to a city, but each pod was able to leave the convoy (as they are not physically joined together) to go to separate destinations, much like a car choosing a particular off-ramp on a motorway.
The firm had been hoping to get its hyperloop system certified in 2025 or 2026, with potential hyperloop projects before the decade ended.
A hyperloop is essentially an experimental concept that sees a pod placed within a vacuum tube that can travel at speeds as high as 600 mph.
Virgin’s system includes magnetic levitation, much like used on high speed rail in Japan and Germany.
The idea is that magnetic levitation lifts a train car above a track, and the magnets also propel the train.
The thinking behind the hyperloop system is that it could connect cities and aid in the rapid transportation of people, at speeds of up to 600mph (a bit faster than existing passenger jets).
The infrastructure can be built either above ground, or below ground, but this is a more expensive option as tunnelling is an money intensive process.
Backers of Virgin Hyperlook, which is developing technology first proposed by Elon Musk, include Dubai government logistics provider and ports operator DP World (which holds a 76 percent stake) and Sir Richard Branson’s Virgin Group.
According to the FT, it has raised more than $400mn in funding.
DP World is reportedly working on a hyperloop-enabled cargo system to deliver freight at “the speed of flight and closer to the cost of trucking” by connecting with existing road, rail and air transport.
The move to freight comes amid expectations that over the next 20 years, air cargo traffic is expected to more than double and the world freighter fleet will grow by more than 75 percent, drastically impacting emissions.
Virgin Hyperloop’s electric land transportation system is being touted as a more sustainable solution for transport with zero direct emissions.
Dropping the passenger option should also lessen the regulatory approval process.
The refocusing of Virgin Hyperloop onto comes amid reports of internal turmoil at the firm, which followed the departure of Virgin Hyperloop co-founder and CEO Josh Giegel last year, the FT reported.
This apparently triggered a “massive talent flight” as other executives quit the company, one former senior employee told the FT. “Morale is low and there is no confidence in the new direction.”
Shunning passenger transport had triggered a “complete unravelling” at the group and would put its sole contract with the Saudi government in jeopardy, the person reportedly said.
But DP World reportedly said the Saudi government saw “great value” in the cargo option, contemplating a route linking the western port city of Jeddah with the capital Riyadh and beyond to the Gulf states on the east of the Arabian Peninsula.
Virgin Hyperloop is in discussions with 15 customers over delivering a pallet-bearing version of the technology, DP World reportedly said.
“It’s abundantly clear that potential customers are interested in cargo, while passenger is somewhat farther away,” DP World was quoted as saying by the Financial Times. “Focusing on pallets is easier to do — there is less risk for passengers and less of a regulatory process.”
The company is also considering a merger with a special purpose acquisition company, or Spac, two people briefed on its strategy said.