The first full-scale Hyperloop will be built in central California in 2016.
Hyperloop is a new method of transportation invented by entrepreneur Elon Musk.
The 5-mile test track will be built halfway between Los Angeles and San Francisco.
The system uses leaky pipes, as well as magnets and fans, to drive up to 28 people at once at high speed.
This model will be slower and shorter than the full-size almost supersonic system envisioned by Elon Musk.
Hyperloop Transportation Technologies has announced an agreement with developers in Quay Valley, California, a planned community that emphasizes sustainability.
The system will be built alongside Interstate 5 in central California, and developers say it will be the first Hyperloop ready for passengers built in an urban area.
Elon Musk, who founded companies such as Paypal, SpaceX and Tesla Motors, first announced the idea for Hyperloop in a 57-page white paper in August 2013.
In his original performance, Elon Musk imagined a system that transports people between Los Angeles and San Francisco – about 400 miles – in 30 minutes.
Shortly after the announcement, Elon Musk passed on the concept to the public so that someone could develop it, saying he was too busy with other projects.
Since then, hundreds of engineers have brought ideas to the project in their spare time.
Elon Musk described the design as a cross between a Concorde, a rail and an air hockey table.