(Bloomberg) -- Elon Musk’s Boring Co. got the green light to work on a project connecting downtown Chicago to O’Hare International Airport, its first major city contract. The plans represent both a victory for the 18-month-old startup and a reality check for the billionaire.

The project, dubbed Loop, doesn’t match the ambitions Musk laid out in a 2013 white paper. That vision called for a system that would run at 760 miles per hour, which he thought would be perfect for connecting cities that are a few hundred miles apart. The Chicago train is expected to reach speeds of up to 150 miles per hour. That should get passengers to the airport in about 12 minutes—still a significant improvement on current options, which often take about 40 minutes by train or car.

Musk hasn’t given up on his original vision for an ultra-high-speed transport system. At a news conference with Mayor Rahm Emanuel on Thursday, Musk said the Loop “will ultimately transition to the Hyperloop system.” That technology would be designed for longer distances, like, say, Chicago to New York. “That’s where you’d want to make use of the Hyperloop,” Musk said.

An update to the Boring Co. website on Thursday outlined plans to rely on “autonomous electric skates,” analogous to train carriages carrying eight to 16 passengers apiece. The pods will be made by Musk’s other company, Tesla Inc., he said at the news conference. Boring Co. leaves room for the possibility of cars using the system, too. The website says a skate could also hold “a single passenger vehicle.”

The system will run underground, giving Musk’s venture a chance to show off its tunnel-boring technology. The company has said it’s faster and cheaper than other subterranean projects. “Tunnel construction and operation will be silent, invisible and imperceptible at the surface,” the company said.

A success in Chicago would give Boring Co. considerable credibility as it tries to move ahead on other projects, including service within Los Angeles and a planned system between Washington, D.C., and New York City. Chicago is bearing no financial responsibility for the project, Emanuel said. Boring Co. will finance the entire construction cost itself.

Musk is a major financier of the effort, but the business has also raised capital through the sale of merchandise, such as hats ($1 million in sales) and flamethrowers ($10 million). Boring Co. said the Chicago project will cost $1 billion, though experts have said similar projects typically cost much more. The company said the price for riders will be about half that of an Uber or taxi, which are currently around $40 per fare.

Funding the effort didn’t appear to be a concern for Musk. “I don’t really have much trouble raising money, historically,” he said. “So I don’t expect too much trouble doing so in this situation.”

To contact the authors of this story: Sarah McBride in San Francisco at smcbride24@bloomberg.net Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

To contact the editor responsible for this story: Mark Milian at mmilian@bloomberg.net, Anne Vandermey

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