Tesla’s Future at Stake: The Ramifications of Musk and Trump's Spat
The public spat between Elon Musk and former President Donald Trump is more than a clash of titans—it’s a warning flare for the entire tech sector. With tariff threats, subsidy rollbacks, and Twitter-style takedowns, the episode underscores just how quickly political favor can turn into political fire.
The Tech Industry and Its Relationship With Trump
Not long ago, many of America’s biggest tech CEOs—eager for regulatory relief and tax cuts—made a pragmatic peace with Trump. Diversity initiatives and lofty “change the world” slogans took a back seat to access and influence. But proximity to power never guaranteed protection. Today, the same companies find themselves scrambling as campaign-trail promises morph into policy landmines.
However, it remains to be seen whether the current dispute will actually have an impact on the promotion of e-mobility in the USA, government contracts for Musk's companies, and customs policy. It would not be the first time that Trump has backtracked after a fierce tirade and not followed up his big words with action. But what happened in the first place?
The latest flashpoint is Congress’s new tax-and-spending package—championed by Trump allies—which slashes federal incentives for electric vehicles. For Tesla, whose pricing model leans heavily on those credits, the move lands like a body blow. Musk fired back on X (the platform formerly known as Twitter), calling the law “short-sighted” and hinting that Trump would have “lost in 2020 without Silicon Valley’s reach.” As usual, some of Musk's remarks came out of left field, mentioning the Epstein files.
Trump, never one to leave a punch unanswered, blasted Musk for “spectacular ingratitude,” reminding followers that Tesla and SpaceX have pocketed billions in federal contracts and subsidies. He even floated the idea of yanking future government work—an existential threat to Musk’s space ambitions and a direct hit to Tesla’s bottom line.
Tesla Crashes
Wall Street didn’t wait for the dust to settle. Tesla stock plunged as much as 17 percent in after-hours trading—shearing an estimated $34 billion from Musk’s net worth—before clawing back some of the losses overnight. Beyond the red ink, investors were spooked by a bigger question: If the White House can muscle a longtime ally so easily, who’s really safe?
For Musk, the options aren’t pretty. Threatening to mothball SpaceX launches might score points online, but it also jeopardizes NASA timelines and national-security payloads. For Trump, pulling federal contracts could play well with a populist base, but at the cost of American leadership in space and clean-energy jobs.
