Musk seeks to bring Vegas Loop’s tunneled Teslas to surface as taxis

By Dana Gentry

Nevada Current

Elon Musk’s underground transit system, billed as a fix for traffic congestion on the Las Vegas Strip and beyond, is seeking regulatory approval to bring its Teslas up for air, where they’d directly compete for passengers with taxis, rideshares, and buses. A request by Musk’s company to operate while the application is pending was denied by then-Nevada Transportation Commissioner David Groover, who was removed from his appointed position last month, according to sources.

The effort by Paradise Transportation Company, LLC, a subsidiary of Musk’s Boring Company, is intended to let Vegas Loop, a project that could take decades to complete, take immediate advantage of traffic at Harry Reid International Airport.

Thanks to Musk’s deep pockets, the above-ground service seeks to undercut competition with fares other modes of transportation can’t match: $5 for trips up to three miles, $10 for four to six miles, and $12 for trips of more than six miles.

While rideshare rates vary, a two-mile Lyft ride runs about $11 while a 13-mile trip is roughly $23, both about twice as much as Paradise’s proposed fare. Taxis charge a base fee of $3.50 plus about $2.75 per mile, according to the Taxicab Authority.

Musk’s application says there is “currently a gap in the market and no regular transportation servicer between the Harry Reid International Airport (and other resorts) and the Vegas Loop,” as well “a gap in service to properties with approved entitlements for Vegas Loop stations.”

Paradise is seeking licenses to transport passengers “between definite points of origin and destination, at a per capita rate,” according to state regulation. Whether the points of origin and destination are confined to the airport, resorts, or any of 104 tunnel stations approved by local governments, as outlined in the application to provide service, and whether the stations would have to be operational, are points of contention, according to insiders.

“Our only concern is that they get properly licensed,” said Jonathan Schwartz, Director of Yellow Checker Star Transportation (YCS) and Newcab, whose companies collectively put about half of the cabs in Southern Nevada on the streets. “They’re essentially operating a taxicab company, and they need to be licensed and permitted as such. They need to charge a compensable rate.”

Industry insiders, who declined to speak on the record for fear of retaliation, say Musk is willing to lose money by undercutting competitors and potentially putting them out of business in order to prove his underground transit concept works.

An initial, heavily redacted application filed by Paradise with the Nevada Transportation Authority (NTA) in September 2024, attempted to conceal from the public the project’s connection to the Vegas Loop. A revised version filed two months later revealed the relationship between Musk’s Boring Company and Paradise, its subsidiary.

Groover, the former state transportation commissioner, approved a bid from Musk’s company in April for interim authority to shuttle passengers on surface streets between the airport and 4744 Paradise Road (a proposed Vegas Loop station that has yet to be built) while the application is pending, but denied the company’s interim request to provide transportation for special events, according to a document obtained by the Current.

Groover confirmed Friday he is no longer with the NTA, and as the former hearing master in an ongoing case, declined to comment.

Gov. Joe Lombardo, who appointed Groover to the NTA, did not respond to requests for comment.

Paradise has not complied with NTA requirements and interim authority for airport transit has not been issued, NTA official Liz Babcock said via email.

The airport is the holy grail for the Vegas Loop. It’s the reason Strip properties are eager to set aside valuable property for Loop stations. But unlike pliant local officials, who have largely allowed Musk’s Boring Company to tunnel without impediment, the Federal Aviation Administration and federal environmental reviews stand between the proposed airport tunnel and some 58 million passengers a year.

‘Soul-destroying traffic’

Steve Hill, executive director of the Las Vegas Convention and Visitors Authority, has hailed going underground as a means of alleviating traffic congestion since 2019, when the LVCVA granted Musk’s Boring Company a $52.5 million contract to connect its expanding convention facility via tunnels. Hill also planted the seeds for expanding the labyrinth to run beneath Strip and downtown casinos, with Musk footing the bill and collecting the revenue.

“This project is exceptionally important to Las Vegas. It’s really an opportunity to make a dent in traffic congestion,” Hill said in a 2024 LVCVA news release.

Now, traffic concerns are taking a back seat to accelerating Boring’s plans to augment ridership at its only publicly operating project in the U.S. The Vegas Loop currently moves more than 30,000 passengers per day across five stations and 2.2 miles of tunnel, the company says. When fully constructed, daily ridership is expected to reach 90,000.

“It’s not going to be a transportation system that they rely on,” Hill said during a phone interview of the surface street version of the Vegas Loop. “It’s just intended to provide them some flexibility while the system’s being built. They’ll stay in the tunnels to the extent they are available. This just gives them some options in the event that they are not complete.”

It took Boring one year to dig 1.7 miles for two convention center tunnels. At that rate, it could take 40 years to complete the entire 68-mile system and 104 stations.

“There is no way mathematically that this could be the kind of grand solution to a city’s transportation problems that they’re pitching,” Jarrett Walker, an international public transit planning consultant told Bloomberg in a story published last week.

Even Boring’s employees, according to Bloomberg, are feeling frustrated working “on a downgraded mission to develop an underground taxi network in Sin City.”

Hill says only about 15 to 20 of the 104 locations approved by local governments for tunnel stations have agreements with Boring. “It’s not the kind of thing you do until you are ready to build,” he said.

The NTA declined to comment on whether Paradise’s lack of entitlement to all station locations would affect the application.

The company and its subsidiary, Paradise, did not respond to requests for an interview.

“The Boring Company just doesn’t talk,” said Hill. “It’s not you, it’s everybody”

Cars, taxis, and tunnels

The LVCVA’s 2019 deal with Boring came as the Regional Transportation Commission coped with rideshare-induced cuts to bus revenue along the Strip, once its bread-and-butter route.

“We certainly don’t feel the Boring Company’s system in the community would be exclusive or crowd out others,” Hill said at the time.

Paradise’s application notes the company “is providing affordable point-to-point transportation service to supplement existing transportation in Las Vegas and meet the expected growing demand for these services.” But common carriers fear Musk’s endeavor will supplant, rather than supplement, existing services.

“It’s going to put me out of business,” said a Lyft driver, who noted ridership is down and driver earnings, determined by the platform’s algorithm, are on the decline.

Visitation to Las Vegas was off by more than 11 percent in June, according to the LVCVA.

“If they’re going to operate as a taxicab company, they should be licensed as a taxicab company,” Schwartz says of the entire Vegas Loop, above and below ground. “They’re operating cars. It’s not a rail. They’re just operating cars through a tunnel. It’s no different than a taxicab.”

The company’s projections for ridership, revenue, and expenses are redacted in its application for a Certificate of Public Convenience and Necessity (CPCN) from the NTA.

Hill contends the NTA intends to regulate the above-ground Loop as a Transportation Network Company (TNC), the same designation as a rideshare. The NTA, however, says the above-ground Loop would operate as a special service and airport transfer service.

Hiil acknowledges the Vegas Loop “is competitive with taxis and rideshares, but the vast majority of what they’re going to do is in the tunnels.” He says it’s up to the NTA to determine whether the Loop’s above-ground component will pose too much competition to taxis and rideshares.

Nevada law permits the NTA to grant a CPCN if, in addition to other requirements, the applicant is financially viable and the approval “will foster sound economic conditions within the applicable industry” and “will not unreasonably and adversely affect other carriers operating in the territory.”

“The reason we have the statute that says these companies need to be financially viable is so you don’t have a business model where you build it out, use pricing power like that, and then you’re the only game in town,’ said the industry insider who asked not to be identified. “Musk can undercut everybody for as long as he wants. He’s financially viable. But does the business model work?”

An NTA spokesperson says the state is mostly concerned with the applicant’s “fitness to operate within the regulatory framework.” Interested parties can file a petition to intervene regarding the applicant’s impact on the market.

“We do not do market impact studies,” NTA attorney Yoneet Wilburn said via email. “We do not have studies on the financial impact.”

Musk has long hailed tunneling as the answer to the “soul-destroying traffic” in metropolitan areas.

Several industry experts suggest that If reducing traffic congestion is the true purpose of the tunnels, Boring Company should allow all electric vehicles to use them.

“That’s silly,” Hill said in response to the suggestion. “The Boring Company built the tunnels. They own them. Whoever has that idea has a misunderstanding of how that works.”

Clark County and the City of Las Vegas, Hill noted, have revenue sharing agreements with Vegas Loop.

But toll roads are popular in a number of states, including California. Boring, experts say, could easily impose a toll tunnel on unaffiliated drivers, with local governments getting a cut of the action. 

The city and Clark County have franchise agreements with TBC that entitle the governments to revenue from rides originating in their jurisdictions. Clark County receives .5 percent of quarterly gross revenue up to $17.5 million and 5 percent of gross revenue in excess of that amount. The city has a similar agreement.

Public transportation experts suggest Paradise’s application is a fait accompli and is likely to be approved by the NTA, which some suggest is subject to regulatory capture.

Musk enjoys unofficial “favorite son” status in Nevada, where his Tesla Corporation is reaping the benefits of more than $1.6 billion in tax breaks. Hill shepherded the initial portion of that deal in his former job as executive director of the Governor’s Office of Economic Development, where he worked with Kris Sanchez, director of the state’s Department of Business and Industry, which oversees the NTA.

Boring again did not respond to requests for comment.

“I notified the attorney for Paradise Transportation yesterday that you requested the applications,” NTA attorney Wilburn said Wednesday, adding that doing so is her personal practice. Asked if she’d notify the attorney that the Current is trying to get in touch, Wilburn declined. “I’d never do that.”

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Dana Gentry is a native Las Vegan and award-winning investigative journalist. She is a graduate of Bishop Gorman High School and holds a Bachelor's degree in Communications from the University of Nevada, Las Vegas.