- Smaller diameter tunnels. 14' is suggested. This is slightly larger than the deep London Tube lines.
- Electrically powered TBMs. Those exist. However, often the business end of the machine is hydraulically powered. Musk is probably thinking of going all electric, at least for the cutter head. After all, he has lots of experience with high-torque electric motors.
- Do cutting and tunnel ring assembly simultaneously. Some TBMs already do that. Those exist; they're called double-shielded TBMs.
Issues glossed over:
- Soil variability. Very different techniques are required for different soils. Sometimes the soil has to be "conditioned", adding something to make it solid enough it can be drilled through.[1] This is the biggest practical problem in tunneling. Too much water is the usual problem.
- The back end. TBMs are long machines. The front end does cutting and ring assembly. The back end, which can be several hundred feet long, is mostly material handling. There's usually a two-track narrow gauge railroad behind the TBM, carrying ring segments forward and dirt backwards. It's constantly being extended with new track sections. That's part of the TBM's job.
Here's a good overview of TBMs design, from Machine Design.[2]
[1] http://www.therobbinscompany.com/wp-content/uploads/2014/08/... [2] http://www.machinedesign.com/archive/art-digging-hole