From allies to enemies: the cost of a Musk-Trump split
WASHINGTON: The bitter clash between Elon Musk and Donald Trump has drawn a spotlight on the South African-born tycoon's businesses.
Here is a look at his affairs as their White House partnership turns toxic, with billions of dollars in market value and government contracts hanging in the balance.
- Tesla -
The Tesla car company is the cornerstone of Musk's business empire and has suffered considerably since the entrepreneur dove into politics.
The electric vehicle giant's stock has plummeted more than 20 percent since the start of the year, reflecting investor anxiety about Musk's increasingly polarizing public persona.
The damage reached a fever pitch on Thursday when the Musk-Trump feud erupted out in the open. In a matter of hours, Tesla shed more than $150 billion in market capitalization, wiping $34 billion from Musk's personal fortune.
The alliance with Trump was supposed to have been Tesla's golden ticket, even if the administration was going to scrap tax credits that had helped it become an automobile juggernaut.
More importantly, Musk could count on Trump's blessing for his ultimate vision: putting fully autonomous vehicles on American roads.
This ambition has been stymied by government regulation over the years, with authorities slowing efforts due to worries that the technology is not ready to hit the road at mass scale.
The Trump administration was expected to lift these regulatory constraints -- a promise now in serious jeopardy.
'Musk needs Trump because of the regulatory environment, and you can't have Trump go from friend to foe,' said analyst Dan Ives of Wedbush Securities.
The administration also regulates vehicle design and would influence the mass production of robotaxis that Musk intends to launch in a pilot program in Austin, Texas, this month.
Musk's hard-right political pivot has alienated the very customers Tesla needs most: environmentally conscious and liberal-leaning buyers who once saw the brand as aligned with their values.
Some drivers have resorted to bumper stickers declaring their cars were purchased 'before Elon went crazy.'
The damage is showing up in sales figures.
In Europe, while overall electric vehicle sales climbed, Tesla's market share crashed 50 percent in April as attention focused on Musk's political activities and the company's aging product lineup.
A recent Morgan Stanley survey said 85 percent of investors believe Musk's political involvement is actively harming Tesla's business.
- SpaceX -
A prolonged battle with Trump poses existential risks for SpaceX, Musk's space exploration company that has become NASA's most critical partner.
SpaceX and NASA are deeply interdependent. SpaceX depends on government contracts worth tens of billions of dollars, while NASA relies on SpaceX for everything from astronaut transportation to satellite deployment.
SpaceX's portfolio includes some of the most sensitive national security projects: launching astronauts to the International Space Station, building spy satellites and operating the Starlink satellite network.
The financial windfall has been enormous, with a December share sale valuing SpaceX at $350 billion -- $140 billion more than just six months earlier, largely due to anticipated government largesse under Trump.
In the heat of the clash on Thursday, Trump threatened to cut off all government contracts, while Musk said he would mothball the Dragon spacecraft, which is vital for ferrying astronauts to and from the International Space Station -- though he later walked back this threat.
- xAI -
Musk has huge plans for his xAI artificial intelligence company. He's angling to compete with OpenAI, the ChatGPT-maker that was co-founded by Musk a decade ago and is now steered by his archrival Sam Altman.
Altman has his own inroads to the White House, where he signed a massive AI infrastructure initiative called the Stargate Project, which recently expanded to Saudi Arabia and Abu Dhabi.
Initially dismissing Stargate as unrealistic, Musk later worked behind the scenes to undermine the project, reportedly telling investors that Trump wouldn't approve any expansion that excluded xAI.
Adding another layer of complexity, Musk folded X (formerly Twitter) into xAI earlier this year.
Musk's $44 billion acquisition in 2022 transformed the site into the go-to platform for conservatives, but Trump himself remains an infrequent user, preferring his own Truth Social platform for communication.
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Florida International University, for instance, in 2023 cancelled a two-decade-old hospitality programme with the Tianjin University of Commerce after Florida Governor Ron DeSantis signed a law restricting US-China partnerships. Since the start of Trump's second term, efforts targeting US-China education exchanges based on sweeping criteria have picked up. Last month, the full House of Representatives passed a bill that incentivises US universities to cut partnerships with a broad group of universities in China. Last week, the State Department declined to provide details on what areas of study or type of link to the Communist Party would make a Chinese citizen subject to greater visa scrutiny. Washington has already set rules that prevent foreign students and scholars from gaining access to sensitive information on university campuses, such as 'export administration regulations' on certain advanced technologies. And in 2020, the US government cancelled visas for graduate programme students from Chinese universities believed to have close research relationships with China's military. For proponents of exchange, the benefits include deep country expertise that Wilder says has been instrumental to US policy on China for decades. While there were more than 11,000 American students in China as recently as 2019, the latest available estimate, from 2024, hovers around 1,000. Experts say government oversight of US-China exchanges is often shaped by broad or inaccurate assumptions. 'American students are not as naive as the congressional committees seem to want to believe they are,' Wilder said, noting that they are often aware that they may be targets for Beijing's espionage or propaganda before heading to China. Andrew Polk, founder of the Trivium China consultancy, noted that US scrutiny often hinged on whether an institution has ties to the Chinese Communist Party – but in China, 'everything is linked to the CCP'. That ubiquity, he argued, makes such a standard too blunt to be meaningful. Jessica Chen Weiss, a professor of China studies at the Johns Hopkins School of Advanced International Studies (SAIS), said reports about Chinese intelligence gathering often 'make little effort to convey a sense of proportion, either in the risks or benefits of having Chinese students'. The Stanford report, for instance, 'uses language like 'existential' without acknowledging that more than 90 per cent of Chinese-born doctoral students in STEM stay in the US ... And it assumes that the US can stay ahead if we prevent Chinese IP theft, whereas China is in the lead on many technologies', she said. Ho-fung Hung, another professor at SAIS, said clear parameters should be established for research areas that are off-limits. 'Even at the height of the Cold War, US and USSR scientific and technological cooperation continued. But a clear boundary needs to be set,' he said. 'Without such boundary, universities are going to be cautious and reluctant to continue working with Chinese scholars and students in all fields,' he continued, adding that China could help the situation by 'rethinking, revising, or refining the law that obliges all individual citizens, companies and organisations to spy for the state'. - SOUTH CHINA MORNING POST
