New questions over Elon Musk’s use of SpaceX resources for Boring Co. tunnels
Elon Musk’s tunnel-digging venture, the Boring Co., is the latest to be drawn into the billionaire entrepreneur’s controversial tradition of spreading overlapping resources across his growing technology empire.
On Tuesday, the billionaire Tesla Inc. TSLA, -4.73% chief is set to unveil a test tunnel developed by the Boring Co., the first of what Musk imagines as a futuristic series of high-speed underground highways to alleviate traffic. The entrance of the two-mile-long Boring test tunnel is being constructed in Hawthorne, Calif., at the headquarters of another Musk-controlled company, Space Exploration Technologies Corp., partly by SpaceX employees using equipment purchased with SpaceX funds, people familiar with the matter said.
The arrangement alarmed some longtime investors in SpaceX, including its largest outside backer, Peter Thiel’s Founders Fund, some of the people said. The investors learned in recent months that despite the diversion of SpaceX resources and staffing to the fledgling Boring startup, it was Musk who was in line to receive almost all of any future profits, these people said.
The investors questioned SpaceX about why their investment dollars into a company ostensibly devoted to launching satellites and carrying humans to Mars were instead partly used to start a separate company that principally benefited Musk. When the Boring Co. was earlier this year spun into its own firm, more than 90% of the equity went to Musk and the rest to early employees, the company has said.
An expanded version of this report appears on WSJ.com.
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