Trump-Musk Feud-A High-Stakes Showdown for Tesla and Elon Musk’s Empire
Original Deutsches Welles report edited with Google Gemini AI
07 June ,2025
A public spat between Tesla CEO Elon Musk and President Donald Trump has sent shockwaves through the markets and raised serious questions about the future of Musk’s vast business interests, particularly Tesla.1 What began as an unprecedented alliance, with Musk investing heavily in Trump’s campaign and taking on an advisory role, has quickly devolved into a bitter feud with potentially billions of dollars on the line.2
The Unlikely Alliance: From Critic to Confidante
Once a vocal critic of Trump, Elon Musk’s political leanings shifted dramatically, driven by frustrations with Obama-era regulations that he felt stifled his ventures. He embraced Trump’s agenda of tax cuts and deregulation, culminating in a reported $300 billion (€263 billion) backing for Trump’s reelection campaign last year. This newfound bond led to Musk taking on the controversial role of leading the Department of Government Efficiency (DOGE) within the Trump administration, tasked with slashing public spending. However, this involvement proved to be a double-edged sword, sparking controversy and negatively impacting Tesla’s stock price and auto sales, ultimately leading Musk to scale back his government work last month.
The Spark of Conflict: “Disgusting Abomination” and Accusations
The public feud ignited during a seemingly cordial farewell in the Oval Office. Trump’s frustration boiled over when Musk publicly criticized his administration’s sweeping tax and spending bill, branding it fiscally reckless and a “disgusting abomination.” The situation escalated dramatically when Musk then accused the US president of alleged ties to child sex offender Jeffrey Epstein. The news conference ended with Trump threatening to revoke Musk’s government contracts, a move that could cost his business empire billions.The animosity quickly spilled onto social media, where both men reiterated their White House remarks, prompting Musk to announce an immediate decommissioning of SpaceX’s Dragon spacecraft, though he later appeared to backtrack.
Market Mayhem: Tesla’s Wild Ride
The immediate aftermath of the feud saw a dramatic market reaction. Tesla stock plummeted by approximately $150 billion in market value on Thursday, marking the largest single-day decline in its history, closing down over 14%.While a brief glimmer of hope emerged with reports of a potential reconciliation call between the two men, leading to a 5% pre-market rally for Tesla, a White House official later confirmed no such call was planned, and even hinted at Trump selling his Tesla in a show of solidarity against Musk.11
This year has been a rollercoaster for Tesla shares, which peaked at $428 in January after a strong performance around the US election. However, Musk’s involvement in the Trump administration led to a nearly 50% drop in March. The stock later rallied following Trump’s pause on unprecedented tariffs and eased regulations on self-driving vehicles, showcasing the profound impact of political developments on Tesla’s valuation.
Billions at Stake: The Future of Musk’s Empire
The ongoing public spat and Trump’s proposed budget plans pose a significant threat to the financial health of Musk’s diverse portfolio of companies.
Tesla’s Peril: Trump’s plan to eliminate the $7,500 federal subsidy on new electric vehicles by the end of the year, seven years ahead of schedule, could severely impact Tesla, Musk’s most profitable firm. JP Morgan analysts cited by Bloomberg estimate this cut could reduce Tesla’s full-year profit by $1.2 billion, with further impacts from potential state-level credit cuts. While this might spur short-term demand as buyers rush to secure the credit, the long-term outlook is concerning. Furthermore, Tesla is already feeling the pinch of Trump’s tariffs, as its Cybercab robotaxi and Semi electric truck production relies on Chinese parts.
SpaceX’s Vulnerability: The threat to tear up federal contracts with Musk’s firms, particularly SpaceX, is where the stakes become truly immense.Since 2000, SpaceX has secured over $22 billion in contracts from the US Defense Department and NASA. Terminating these contracts would have a devastating financial impact on SpaceX and severely disrupt the US government’s ambitious space programs. SpaceX’s Crew Dragon is currently the only US spacecraft certified to transport crew to the International Space Station (ISS), highlighting its critical role.
Starlink’s Double-Edged Sword: Ending Pentagon contracts involving Musk’s Starlink satellite internet service would be a lose-lose scenario. While Starlink provides crucial broadband services to rural areas and is extensively used by the US military for various operations and disaster response, its termination would harm both Musk’s interests and the government’s strategic capabilities.
The Trump-Musk feud is more than a personal disagreement; it’s a high-stakes political drama with profound business implications.17 The outcome will not only determine the financial fortunes of Elon Musk’s empire but also potentially reshape the landscape of the electric vehicle industry and US government space and communication programs.
