Saudi Arabia has pulled a planned deal with Virgin Hyperloop One after Richard Branson said he would freeze ties with the kingdom until more details are known about the disappearance of the journalist Jamal Khashoggi.
People familiar with the situation said that the two sides were planning to sign a deal for a new feasibility study at a ceremony during the upcoming Future Investment Initiative (FII) conference in Riyadh.
The deal would have focused on manufacturing, knowledge transfer and route alignments for the futuristic transport system.
The cancellation was the first concrete retaliation by Saudi to the wave of Western executives deciding not to attend FII and criticising Saudi over the alleged murder of Mr Khashoggi.
Rob Lloyd, Hyperloop’s chief executive, and Josh Giegel, its chief technology officer, were planning to attend the conference before Sir Richard issued a statement that suspended talks about a $1bn Saudi investment in Virgin’s space businesses and over two tourism projects in Saudi.
Sir Richard said if the allegations about Mr Khashoggi were true it would change the ability of “any of us in the West” to do business with Saudi Arabia.
His statement drew a rapid Saudi response, the people familiar with the situation said. “An hour and a half later there was a call disinviting Hyperloop from the conference,” said one of them. “They killed the deal.”
Virgin Hyperloop had spent 18 months courting the Saudi transportation ministry and staff expressed frustration that the effort had been had been scuppered by the statement from Sir Richard, a minority shareholder in the company.
One person close to Sir Richard said there had been no economic loss from the Saudi decision. Virgin Hyperloop has more than half a dozen feasibility studies under way from Dubai to US states including Texas and Ohio. It is undertaking more advanced studies in India but has yet to bid on a construction contract.
According to the company’s website, Hyperloop has so far raised $295m in funding from investors including DP World, Caspian VC Partners, Virgin Group, Abu Dhabi Capital Group, SNCF and GE Ventures. It aims to have its first working services in operation by the mid-2020s.
Mike Pompeo, US secretary of state, arrived in Saudi Arabia on Tuesday as it emerged that the authorities may admit that the dissident journalist died during a rendition operation that went wrong.
Crown Prince Mohammed bin Salman in March visited the Virgin Galactic base during his US tour, where he was shown a Hyperloop “pod” painted in the colours of the Saudi flag. Prince Mohammed at the time said the transport system could be a catalyst for change in the kingdom.
The technology, originally conceived by Elon Musk, envisions pods running at speeds of up to 700 miles per hour through vacuum tubes, potentially cutting travel times from Riyadh to Jeddah from 10 hours to 76 minutes.
Virgin Hyperloop One, which is also backed by Dubai Ports operator DP World, still needs to get the financial funding needed to bring the technology out of the realm of science fiction.
Company executives, who are trying to re-engage with the Saudi government, have been told not to attend the event, the people said. Virgin Hyperloop One, which declined to comment on its business relationship with the kingdom, confirmed that it would not be attending the conference.