 "Can Musk’s businesses afford his breakup with Trump?")
Donald Trump and Elon Musk’s public meltdown has glued the world to their phones. Their ugly online brawl seems far from over, with the United States president refusing to speak to the tech billionaire on Friday (June 6).
Amid the row, Trump threatened to end Musk’s government subsidies and contracts. As the spat escalated on Thursday, Tesla shares went into freefall and Musk’s net worth plunged.
Once a powerful political alliance, the relationship between Trump and Musk appears to have come to its end. But will the businesses of the world’s richest person bear the brunt of the public fallout with the president of the United States?
Let’s take a look.
Tesla takes a hit
What began as a disagreement over US President Donald Trump’s signature spending bill soon turned into an explosive row. The Republican leader and the Tesla CEO traded barbs on their respective social media platforms.
As the animosity grew, Trump said the tech billionaire had gone “crazy” and threatened to cut Musk’s government contracts and subsidies for his companies.
Musk responded, “Go ahead, make my day.”
The high-profile falling out saw Tesla’s shares plummeting 14 per cent on Thursday, losing about $152 billion in market value — the largest single-day plunge in the company’s 15-year history on the public market.
Tesla’s stock rebounded on Friday, rising four per cent after the steep fall.
Musk continues to be the world’s richest person; however, his net worth declined by $34 billion, as per Bloomberg’s Billionaires Index.
There are also reports that Trump is mulling selling the Tesla – a red Model S – he purchased in March to show solidarity with Musk amid anti-Tesla protests.
Tesla contributes to most of Musk’s wealth. However, the company’s shares have been on a rollercoaster this year after the stocks rose about 29 per cent following Trump’s US presidential election victory in November.
Musk spent nearly $300 million to bring Trump back to the White House. The Republican leader rewarded him by giving him a major role in his administration.
But Tesla suffered because of Musk’s actions as the head of the Department of Government Efficiency (Doge).
“Musk hasn’t done Tesla any favors by taking extremely unpopular actions in his time at Doge, and globally the business is struggling from other decisions, like focusing on the Cybertruck instead of releasing more new practical models that consumers actually want,” John Helveston, a professor at George Washington University who studies the electric vehicle industry, told NPR. “In the European Union, sales are down heavily from the political damage, and sales in China are down from intense competition of very competitive Chinese EVs.”
Musk’s frustration with Trump’s “one, big beautiful bill”, which he called a “disgusting abomination”, stems from the legislation’s proposal to cut funding for electric vehicles and related technologies, which would hurt the Tesla CEO’s businesses.
The bill slashes the electric vehicle tax credit and federal funding for charging stations.
Tesla is America’s biggest electric vehicle company and also controls the country’s largest charging network. If Trump’s plan to chop subsidies on new electric vehicles is implemented, Tesla’s full-year profit could decrease by $1.2 billion, Bloomberg reported, citing JP Morgan analysts.
Speaking to NPR, Jeffrey Sonnenfeld, an associate dean at the Yale School of Management, said further challenges for Tesla could eventually hit Musk’s wealth.
“Tesla is hugely reliant on federal largesse for the build-out of EV charging infrastructure, not to mention federal regulatory approval for his continued autonomous driving and robotics experiments,” he said.
“His wealth is highly precarious,” Sonnenfeld said, adding: “The reality is that Musk’s position is far weaker than many realise.”
Tesla was already facing challenges before the feud between its CEO and the US president. After the company’s stocks peaked at $428 in January, its shares declined by nearly half in March as investors got spooked by Musk’s role in the Trump administration.
A rift with the Trump administration could affect government support for Tesla as well as tariff exemptions that the company is seeking to buy Chinese parts for its Cybercab robotaxi and Semi electric truck.
The “schoolyard fight” between Trump and Musk underscores how “Tesla’s weak accountability measures and poor governance threaten not only the company’s financial stability and shareholder value, but also the future of homegrown EV production,” New York City Comptroller Brad Lander told CNBC in a statement.
According to The Washington Post analysis in February, Musk and his businesses have received at least $38 billion in government contracts, loans, subsidies and tax credits.
However, the breakup with US President Trump may not be the end of the road for Musk and his companies.
According to Paul Levinson, a professor at Fordham University, there could be more short-term stock market falls for Tesla and a hit to Musk’s riches. However, even if some federal funding to the billionaire’s businesses stops, it is unlikely to impact the tech billionaire in the long run.
“Musk has ample resources to sustain those losses, reshuffle and rebuild his companies and holdings, and come out ahead and on top,” Levinson said to NPR. “Bottom line: if all the Trump government does in its feud with Musk is attack his financial interests, Musk is very likely to not only survive but continue to thrive.”
SpaceX, Starlink may be safe from spat
The US government’s space ambitions are intricately linked to Musk’s SpaceX. As the public row with Trump escalated on Thursday, the 53-year-old former adviser to the US president threatened to decommission SpaceX’s Dragon spacecraft.
However, Musk soon seemingly backtracked when an X user suggested he “cool down”. The billionaire wrote, “Good advice. Ok, we won’t decommission Dragon.”
SpaceX’s Crew Dragon is currently the only US spacecraft certified to ferry crew to the International Space Station (ISS).
The US Defense Department and the Nasa space agency have given more than $22 billion in contracts to SpaceX since 2000.
“While their political partnership appears to be at an end, it is difficult to imagine the government cancelling SpaceX contracts anytime soon,” Dan Grazier, senior fellow and programme director at the Stimson Center think tank, told NPR.
“It will be some time before any of the company’s competitors will be able to take up the slack, so it looks like the president and the tech mogul will have to find a way to get along,” he said.
SpaceX’s Starlink internet satellite company could also be safe from Trump’s ire. It is part of the US federal government’s effort to provide internet access to underserved parts of the country.
So, tearing up Pentagon contracts with Starlink could be a loss for both Musk and Trump.
While they might not like it, the duo have to rely on each other.
With inputs from agencies
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