Elon Musk and former President Donald Trump find themselves embroiled in another public dispute, with Musk’s business interests increasingly coming under scrutiny due to their recent tensions. Investors reacted negatively on Tuesday, driving Tesla’s stock down over 4%, continuing a year that has seen the electric vehicle manufacturer lose about 20% of its value despite a recent rally.
Musk’s controversial alignment with Trump, particularly during the latter’s presidency and election campaign, has drawn backlash that may have affected Tesla’s sales. However, investor sentiment towards Tesla remains predominantly positive, thanks to Musk’s strategies shifting the company’s focus from conventional electric vehicles to self-driving taxis and robotics, helping push its market valuation close to $1 trillion.
While Tesla is Musk’s most high-profile venture, it is SpaceX, his rocket company, that is more heavily dependent on government contracts. SpaceX’s recent valuation is approximately $350 billion, buoyed by numerous contracts, especially for NASA’s Artemis program aimed at lunar exploration. Additionally, SpaceX operates as the sole active spacecraft for ferrying astronauts to and from the International Space Station and plays a crucial role in the Department of Defense’s satellite missions.
The financial ties between Musk’s companies and government funding are significant. Since 2000, federal contracts have brought in $22.5 billion for both Tesla and SpaceX, with SpaceX alone likely accounting for close to $38 billion. This reliance underscores the potential risks that Musk faces amid his ongoing conflict with Trump, particularly as both men navigate the political and economic landscape.
Musk’s dispute with Trump began to escalate last month after Musk stepped down from a government role and publicly criticized a Republican-backed tax bill. In a retaliatory move, Trump threatened to cut Musk’s governmental subsidies and contracts. Although Musk temporarily considered decommissioning SpaceX’s Dragon spacecraft, he quickly backtracked after public advice advocating for a de-escalation.
Despite the persistent tensions, analysts suggest that the friction may be temporary, as Musk’s business prospects depend heavily on government contracts—metaphorically, they are tied at the hip. In an interesting turn, Musk is contemplating the launch of his own political party aimed at addressing fiscal issues he attributes to Trump’s policies. Although he cannot run for office himself, any political candidate he supports might encounter scrutiny regarding conflicts of interest.
This ongoing saga highlights Musk’s unique position at the intersection of business and politics, and as relationships evolve, it could lead to new dynamics in both sectors.