As Elon Musk prepares to unveil a test tunnel for a high-speed train in California on Tuesday, new questions are arising about the financial overlap between his tunnel digging venture, The Boring Company, and his space exploration business, SpaceX.
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The Boring Company’s tunnel is being constructed at the headquarters of SpaceX, by SpaceX employees using SpaceX-funded equipment, The Wall Street Journal reported, citing people familiar with the matter. That overlap aroused suspicions among some of SpaceX’s high-powered investors — including renowned venture capitalist Peter Thiel — who reportedly wanted to know why their investment dollars were being allocated toward the tunnel-building venture without approval from the board. Thiel has provided the largest amount of outside funds to SpaceX.
The Boring Company was spun off into its own firm earlier this year and more than 90 percent of the equity went to Musk – who is also set to be by far the largest beneficiary of any future profits, according to The Journal.
Concerns are said to have reached the SpaceX board, which prompted an undisclosed diversion of resources back from The Boring Company to SpaceX.
In a statement to FOX Business, a spokesperson for SpaceX said the company owns about 6 percent of The Boring Company, "calculated based on the value of land, time, and other resources contributed since the creation of the company."
In a statement to The Journal, Peter Thiel’s firm, Founders Fund, said it had “no concerns.”
This is not the first time Musk has blurred the boundaries among his business ventures. He told The Journal during a 2016 interview that there were “a few cases” where he borrowed money from one company to finance another that was faring less favorably.
Musk has also not been shy about buying stock in his own companies. Musk purchased $10 million worth of Tesla shares in October, having previously promised to buy $20 million – equal to the amount he and the company paid to the SEC to settle Musk’s fraud charges. He purchased nearly $25 million worth of shares in June, after spending about $10 million just a month earlier.
On Tuesday, Musk will open part of a two-mile-long Boring Company tunnel in Hawthorne, California, as a preview of his larger vision to create a high-speed tunnel system to bypass heavy Los Angeles traffic. He is also expected to demonstrate autonomous vehicles that will transport residents through the tunnel.
The entrepreneur has plans to build another such tunnel that would end at the Los Angeles Dodgers’ stadium, and one in downtown Chicago.