Sci-fi Hyperloop-type technology under development at ET3

Source: ET3

As the hype surrounding Elon Musk's Hyperloop generates more and more buzz, the potential reality of super high-speed tube transportation is now being discussed around the world. As with any new technology, even if it's still more theory than reality, investors are circling and hoping they are getting in on the ground floor of the next great thing.

Need proof?

Check out ET3 in Longmont, Colo. The company says it already has investors from around the world backing its efforts to develop high-speed tube transportation that will move people from New York to China in just a couple of hours.

"New York to Beijing, China, in about 2 hours," said Daryl Oster, founder of ET3. "That's 8,000 miles or 4,000 miles per hour. L.A. to New York would be in 45 minutes, with a likely speed of 2,000 mph."

As you read those projections you may be thinking Oster and anyone else discussing superfast tube transportation is nuts. They've heard the naysayers, but believe their idea is finally gaining credibility with the masses thanks to inventor and entrepreneur extraordinaire Elon Musk.

Musk's Hyperloop

Earlier this summer at the D11 conference, when Musk first mentioned the idea of the Hyperloop, he described it as a "cross between a Concorde, a rail gun and an air hockey table." It was the kind of description that you might expect from a sixth-grade student at a science fair.

But because Musk has an established track record of developing and turning ideas that sound extreme into thriving real-world products and companies, his Hyperloop idea is not being dismissed.

(Read more: Musk unveils plans for $10 billion Hyperloop)

On the contrary, people are wondering if Musk is giving us a peak at the next great revolution in transportation.

He says the Hyperloop will be solar-powered and cost passengers less than what it would cost to take the train or plane that same distance.

It sounds too good to be true. Then again, when Musk said he would build an electric car company that would change the auto industry, there were many people chortling. I know, I was at many auto shows when executives from established automakers would scoff at the idea of Tesla becoming a player in the industry. Few of them are scoffing now.

(Read more: Investors plug back in after Tesla earnings report)

That track record is why the public is wondering if the Hyperloop could be more than just hype.

Start-up attracting investors

Daryl Oster started ET3 in Longmont in 1997. His goal: developing superfast tube transportation. As he likes to say, the tube would be a guideway that functions similar to a highway.

"Car-sized vehicles that are magnetically levitated, operate inside these tubes that have all the air removed. Since there is no air, there is no friction. So, once the vehicles get up to speed and merge into the flow of traffic like a car merging on to a freeway, they are coasting the whole trip." said Oster.

(Read more: Goldman sees 'creative destruction' in these trends)

"Ninety percent of the energy that was used for acceleration can be recovered when the vehicle slows back down, kind of like stepping on the brakes of a Toyota Prius with regenerative braking that can capture some of that acceleration energy. With ET3, there is no air in the way of the vehicle, it is like space travel conditions and so it coasts for the entire trip, using no additional energy."

Oster said the key to his tube transportation will be the low cost of moving people from one location to another. He estimates ET3 will be able to provide 50 times the amount of transportation per kilowatt-hour compared with electric cars and electric trains.

"Bottom line, it only costs 20 cents worth of electrical energy to get up to 350 mph," said Oster.

ET3 is a consortium with a number of licensees who contribute to the company in exchange for 6 percent value-added royalties.

Oster said: "Any company, individual, institution or government can get involved with us and leverage past investments that they have already made. We are creating a new market for past investments."

Gridlock creating mass transportation

The one factor that could ultimately keep the Hyperloop or any other form of superfast tube transportation from becoming reality is the inability of governments—local, state, federal and international—to develop mass transit systems quickly in a cost-efficient manner.

Elon Musk, billionaire and chief executive officer of Tesla Motors and SpaceX.
Valentin Flauraud | Bloomberg | Getty Images
Elon Musk, billionaire and chief executive officer of Tesla Motors and SpaceX.

A good example is the push by the Obama administration to develop high-speed rail around the country. Five years after President Barack Obama was sworn in and promised to put high-speed train service on the fast track, most of the proposals are far from reality.


Government bureaucracy, concerns about costs and the fact some elected leaders are openly fighting to stop the development of high-speed rail.

As bad as the fight is over getting high-speed rail built between two cities in the U.S., now imagine the fight that would erupt if someone proposed building a superfast transport tube between New York and Mexico City or Los Angeles and Singapore.

For those who say the government won't be involved and it will just be individuals, keep in mind there are millions of land owners who could derail or run up the costs of a tube transport line going above or below their property.

(Read more: Elon Musk: Self-Driving Cars, Hyperloops and a Cheaper Tesla)

Tube transportation may very well be the future of mass transportation. Perhaps 20 or 25 years from now it will be the way you go from Chicago to Miami in 45 minutes. Then again, if governments struggle to find a way to build bridges or repair roads, how can we expect the government to truly step up to the plate and help develop superfast tube transportation.

By CNBC's Phil LeBeau. Follow him on Twitter: @Lebeaucarnews.