Elon Musk’s conflict with United States (U.S.) President Donald Trump is exposing his companies to all the dangerous consequences of a “war” with his former good friend.
From SpaceX’s role as a contractor in the fields of defense and space research to Starlink’s hopes for billions of dollars in federal subsidies for broadband internet and contracts for air traffic control, Musk’s enterprises could have achieved potentially unlimited gains. Even after the world’s richest man left the White House, collaborators from his Office of Government Efficiency remained in key positions in agencies that make decisions about his companies, including considering how to address safety issues at Tesla, alleged security breaches involving the platform X, Musk’s potential ventures in cryptocurrencies, or air pollution generated by his artificial intelligence (AI) agent Grok.
Now those same government bodies – the vast, powerful federal bureaucracy that Trump openly portrayed as a weapon against his enemies – are potential threats to Musk’s business empire.
The consequences of Musk and Trump’s feud have already reduced Tesla’s stock value by several billion dollars. The drama could reshape numerous political outcomes, including the future of brain chip technology or U.S. hopes of reaching Mars soon.
“This is a real soap opera. A lot of people saw this as a potentially combustible relationship, but the speed and intensity with which it burned out is truly astonishing,” said Steve Sosnick, a Wall Street veteran who works as chief strategist for Interactive Brokers.
Here are some of the potential implications for Musk’s businesses as the once-powerful alliance between two men at the height of wealth and political power turns into an ugly divorce:
Tesla is likely the cornerstone of Musk’s business interests, a company that helped make electric cars mainstream in the U.S. and has a vision of dominating the future of autonomous taxis, but a large part of its fate is in the hands of regulators in the departments of transportation, treasury, and commerce.
Before the start of Trump’s second term, the National Highway Traffic Safety Administration under the Department of Transportation opened investigations focused on significant issues with Tesla’s design, mostly involving its suite of technologies for automatic acceleration and lane-keeping, which the company misleadingly labels as “Autopilot” or “Full Self-Driving.” The agency investigates safety issues with car manufacturers and can issue recalls for vehicles with defects.
Musk is also heavily invested in autonomous vehicle technology and has a significant stake in its broader adoption. Early moves by the Department of Transportation appeared aligned with Musk’s interests, including a request for less independent reporting of some accidents involving driverless cars.
Trump’s most direct threat of punishing Musk came Thursday in a post on Truth Social, in which he contemplated cutting billions of dollars in U.S. government contracts that this megabillionaire’s companies have secured. Calling it “the easiest way to save money,” Trump added that he was “always surprised Biden didn’t do it!” That threat could have a twofold effect.
SpaceX alone has received at least 20.9 billion dollars in government contracts over the past 18 years, mostly from NASA and the Department of Defense, according to public federal spending records. Most of that funding was allocated in the last five years.
However, the government also depends on Musk’s companies, and the Pentagon relies on his rocket company SpaceX for rapid and low-cost launches. It is unlikely that his biggest competitors –including the ULA joint venture backed by Boeing and Lockheed Martin, or BlueOrigin, led by Jeff Bezos – could make up the difference.
NASA relies on SpaceX as the only U.S. company capable of transporting astronauts to and from the International Space Station, at least until Boeing resolves issues with its Starliner. Aware of that fact, Musk responded to Trump’s announcement with a counterstrike – tweeting that SpaceX would “immediately” begin decommissioning its Dragon spacecraft. Musk later retracted that comment at the advice of an X account called “Alaska.”
