In face-off with Trump, Tesla shares plunge and Musk threatens NASA
Elon Musk, CEO of Tesla and self-proclaimed 'first buddy' of United States President Donald Trump, has stepped up criticism of the president's massive tax legislation in recent days, leading to a blow-up which saw Tesla stock plunge and Musk saying he would decommission Dragon aircraft immediately.
NASA relies on SpaceX's Dragon spacecraft to ferry astronauts to and from the International Space Station under a contract worth roughly $4.9bn. The capsule is the only US spacecraft capable of flying humans in orbit.
Musk's statement marks a dramatic escalation in an intensifying fight with Trump that burst into public view this week, when Musk opposed the Trump administration's linchpin spending bill.
Taking Dragon out of service would disrupt the International Space Station (ISS) programme, which involves dozens of countries under an international agreement signed more than two decades ago. Russia's Soyuz system is the only other crewed spacecraft that sends astronauts to the ISS.
Musk's comment came in response to a post by Trump on his social media site, Truth Social: 'The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts.'
The first impact of the public break up between the two powerful men was on Tesla shares, which dropped nearly 15 percent, wiping off around $150bn from its market value on Thursday on a day otherwise devoid of news for the electric vehicle (EV) maker, leading traders to speculate that Musk's increasingly pointed rhetoric suggests strain in the relationship that has benefitted his sprawling empire of businesses.
Trump said on Thursday that Musk was upset because the bill took the EV mandate away.
'Look, Elon and I had a great relationship. I don't know if we will any more,' the president said.
'He said the most beautiful things about me. And he hasn't said bad about me personally. That'll be next. But I'm very disappointed.'
Trump's comments extended a decline in Tesla shares.
The world's richest man, a key figure in the Department of Government Efficiency's (DOGE) cost-cutting initiative for several months, has blasted the bill, not long after he said he would spend less time in the White House and more time with his companies.
On his social media platform X, Musk has called on Congress members to kill the legislation, calling it a 'disgusting abomination'.
'It more than defeats all the cost savings achieved by the DOGE team at great personal cost and risk,' Musk, the largest Republican donor in the 2024 election cycle, said on X on Tuesday.
Musk's leadership of DOGE and his alignment with the Trump administration have put off some Tesla buyers. Sales of his EVs have slumped in Europe, China and key US markets like California, even as overall electric vehicle purchases continue to grow.
In the past few weeks, Musk had slowly started to separate himself from the White House, stung in part by the wave of protests against Tesla.
'Elon's politics continue to harm the stock. First, he aligned himself with Trump, which upset many potential Democratic buyers. Now, he has turned on the Trump administration,' said Tesla shareholder Dennis Dick, chief strategist at Stock Trader Network.
Musk's other businesses, SpaceX and Starlink, dominate their respective markets, but have also come under scrutiny due to Musk's relationship with Trump.
Tesla shares are down nearly 22 percent since May 27, roughly coinciding with his decision to pull back from Washington's activities.
The stock has been on a rollercoaster ever since Musk's endorsement of Trump in mid-July 2024 in his re-election bid, gaining 169 percent from that point through mid-December. That was followed by a 54 percent sell-off through early April as a 'Tesla Takedown' protest movement intensified.
The House of Representatives version of the budget bill proposes largely ending the popular $7,500 electric vehicle subsidy by the end of 2025. Tesla and other carmakers have relied on incentives for years to drum up demand, but Trump promised during the transition to end the subsidy.
Tesla could face a $1.2bn hit to its full-year profit, along with an additional $2bn setback to regulatory credit sales due to separate Senate legislation targeting California's EV sales mandates, according to JP Morgan analysts.
'The budget bill contains bad stuff for Tesla with the end of the EV credits, and just generally his falling out with Trump has risks for Tesla and Elon's other companies,' said Jed Ellerbroek, portfolio manager at Argent Capital Management.
Musk's public attacks have upset potential Republican Tesla buyers as well, Dennis Dick added. One White House official on Wednesday called the Tesla CEO's moves 'infuriating'.
The billionaire joined Senate Republican deficit hawks this week in arguing that the House bill does not go far enough in reducing spending.
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