Former U.S. President Donald Trump has once again disrupted California’s high-speed rail project by declaring that the federal government will no longer provide financial support. This decision has heightened tensions with the state government and put the already troubled rail initiative in further jeopardy. However, industry observers believe the development will have little impact on Hyundai Rotem’s North American operations, as the company’s new U.S. plant is unrelated to the California rail project and has already secured contracts.
According to Railway Supply, a railroad industry publication, Trump recently announced his intention to cut off federal funding for the construction of California’s high-speed rail, citing excessive costs and delays. The U.S. Department of Transportation is reportedly launching an investigation into the project.
Launched in 2008, the California high-speed rail project aims to connect San Francisco and Los Angeles via an 837-kilometer high-speed rail line. Initially supported by local residents, California voters approved the issuance of $10 billion in state bonds to fund the project.
The state government had originally planned to complete the first phase by 2029 with a budget of $33 billion. However, due to repeated delays, the projected completion date has been pushed back to 2033, with cost estimates ballooning to as high as $128 billion.
The contractor selection process has also stalled. The California High-Speed Rail Authority (CHSRA) had initially shortlisted Hyundai Rotem, Alstom, and Siemens Mobility as candidates. In April last year, the list was narrowed down to Alstom and Siemens Mobility, with hopes of finalizing a contract by the end of the year, though no progress has been made since.
During his first term, Trump also opposed the project, citing escalating costs and delays. In 2019, he revoked $1 billion in federal funding that had previously been granted, sparking conflict with California officials. Although the Biden administration later reinstated the funding and revived the project, Trump’s potential return to power has once again cast doubt on its future.
California Governor Gavin Newsom criticized the move, arguing that halting the project now would waste billions already invested and harm the nation’s infrastructure competitiveness. The CHSRA emphasized that the project has already created more than 15,000 jobs.
Meanwhile, the crisis surrounding the high-speed rail project is not expected to significantly impact Hyundai Rotem’s business in North America. The company’s new plant in California is part of a strategic initiative aligned with the “Build America, Buy America” (BABA) policy and is focused on supplying trains for the Los Angeles Metro, rather than participating in the state’s high-speed rail venture.
In February of last year, Hyundai Rotem secured a $660 million contract to supply railcars to the Los Angeles County Metropolitan Transportation Authority (LACMTA). In preparation for the 2028 Los Angeles Olympic and Paralympic Games, the company will deliver two-car train sets and is constructing a new manufacturing facility. At the end of last year, it acquired a 44,609-square-foot property in California. The facility is scheduled to begin operations this year and is aimed at meeting future railcar replacement demands and securing additional contracts in the U.S. market.
