After ten years of working on a railway project to link Las Vegas and Los Angeles, Nevada-based XpressWest is finally doing it with the aid of China Railway International. The two companies announced on Thursday that they will join forces to make the high-speed train a reality.
The deal was presented in Beijing by representatives of the Chinese firm and XpressWest. The act promises to cement the cooperation between the two world powers, precluding the United States visit of President Xi Jinping, scheduled for next week.
In order to simplify its international business presence, China merged two of its largest train producers and created CRRC. The newly established firm signed an accord with XpressWest, an American venture under the control of Marnell Companies. There is scarce information about financial details of the deal.
Financial and business analyst Gary Wong approximates the total cost of the project at $5 billion. The Hong Kong adviser states that, if the project gets implemented, the Chinese company will reap the fruits for years to come.
"If this opens up the United States market for them, opportunities for future expansion will increase. And if (their technology) is used in the United States, it will be easier for them to sell to other countries," he says.
CRRC has to play in a global market of high-speed rail producers, on pair with Siemens AG from Germany or Alstom SA from France if it wants to win the trust of American travelers. So far, the company signed contracts in Russia, Mexico and Indonesia, but the latter two bounced as a consequence of bureaucratic issues.
With an average travel speed of 150 mph, the train will cover the distance between the two major American cities in about 80 minutes. Fares are rumored to cost $89 with stops in Victorville, Nevada and Palmdale, California. One of the purposes of XpressWest is to "expand the Las Vegas experience," along the 230-mile track. The train will contain entertainment club cars where guests can have a drink or enjoy a good meal before reaching their destination.
"We want to attain the position we deserve in the global market...There is no other company on earth that is able to simultaneously research and produce high-speed trains, electric multiple units, subways," Cao Gangcai, CRRC's vice chief economist, says.
Construction is expected to begin in 2016, but mandatory approvals will be required.