Elon Musk, the CEO of Tesla, has recently ramped up his criticism of President Donald Trump’s new tax legislation, leading to a significant drop in Tesla’s stock price. Musk, who has previously described himself as a close ally of Trump, expressed his concerns publicly, stating he would immediately decommission SpaceX’s Dragon spacecraft, which is crucial for transporting astronauts to the International Space Station (ISS).
The Dragon spacecraft is vital for NASA’s operations, as it is currently the only American vehicle capable of carrying humans into orbit. Musk’s comments came in response to a post from Trump on his social media platform, where the president suggested cutting government subsidies and contracts for Musk’s companies as a way to save money.
This public dispute has already had financial repercussions for Tesla. The company’s shares fell nearly 15 percent in one day, erasing about $150 billion from its market value. Analysts believe that Musk’s escalating rhetoric indicates a strained relationship with Trump, which could have negative implications for Tesla’s future.
Trump commented that Musk was upset because the new budget bill removed the electric vehicle mandate, which has been beneficial for Tesla. He expressed disappointment over Musk’s change in tone, recalling their previously strong relationship.
Musk has been vocal against the budget bill, calling it a "disgusting abomination" on social media. He argues that it undermines cost-saving measures implemented by the Department of Government Efficiency, where he has been actively involved. His criticism has not only affected his relationship with Trump but also sales of Tesla vehicles in key markets like Europe and California.
The budget bill proposed by the House of Representatives aims to end the $7,500 electric vehicle subsidy by the end of 2025. This move could potentially cost Tesla $1.2 billion in annual profits and an additional $2 billion from regulatory credit sales, according to JP Morgan analysts. The fallout from Musk’s public stance may also deter some Republican customers from buying Tesla vehicles.
As tensions rise, the future of Musk’s businesses, including SpaceX and Starlink, could be impacted by his relationship with Trump and the political landscape surrounding electric vehicles. The situation remains fluid as both Musk and Trump navigate their evolving roles and the implications for their respective interests.