He can't quit him — easily. Why SpaceX could complicate the Trump-Musk split

CBC

8 hours ago

Billions of dollars lost in government contracts. A slew of regulatory headaches. These are just some of the ramifications Elon Musk could face over his fallout with U.S. President Donald Trump.
The two men may have personally split, at least for now. But if Trump is seeking to retaliate against the tech billionaire, severing the relationship between Musk's many companies and the U.S. government could prove difficult, analysts say.
"I would say the president has more cards than Musk does, but it doesn't mean that [Musk] doesn't have any," said Peter Hays, a lecturer of space policy and international affairs at George Washington University's Space Policy Institute.
Both sides have "all kinds of leverage on each other," added Dan Grazier, senior fellow and program director at the D.C.-based Stimson Center, a think-tank focused on international security.
The public fallout came after Musk repeatedly criticized Trump's spending bill. Trump eventually lashed back, posting on Truth Social that the easiest way to save "Billions and Billion of Dollars" would be to "terminate Elon's Governmental Subsidies and Contracts."
However, those threats might not be so simple to implement.
SpaceX, satellite contracts
SpaceX has $15 billion US worth of contracts from NASA for the company's Falcon 9 rockets and its development of the multipurpose Starship rocket system, tapped to land NASA astronauts on the moon this decade.
The company has also been awarded billions of dollars to launch most of the Pentagon's national security satellites into space while it builds a massive spy satellite constellation.
That's why, if Trump cancels those contracts, SpaceX would have to seriously rethink its business model, Grazier says.
Musk "needs the government to keep his company operating as they are," he said.
But the U.S. government is also reliant on SpaceX, he says. For example, it's the only U.S. company capable right now of transporting crews to and from the International Space Station, using its four-person Dragon capsules.
"Trump needs Elon Musk in pretty much the exact same way that Elon Musk needs President Trump, as far as SpaceX goes," Grazier said.
"It's not like the United States has a credible alternative to SpaceX right now as far as space launch goes," he said. "And the United States needs reliable space launch capabilities."
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Tearing up SpaceX contracts would have a huge domino effect across a lot of the government's critical functions in space, according to Clayton Swope, senior fellow at the Center for Strategic and International Studies.
And those functions are "most closely centred around the Pentagon and NASA," he told Bloomberg News.
But if Trump holds off on cancelling SpaceX contracts, and is looking for another way to poke at Musk, he could put the squeeze on Musk's companies through the government's regulatory agencies, some experts say.
"Those can all be leverage points for the administration," said Cary Coglianese, director of the University of Pennsylvania's Penn program on regulation.
Last year, Musk was waging at least 11 separate regulatory or legal battles with the Biden administration or independent federal agencies related to his business empire, according to NBC News. This might have been why, in part, Musk eventually endorsed Trump, who had pledged during the presidential campaign to slash regulations.
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Yet Trump could now pressure those same agencies to make Musk's life difficult. Just some of the regulators Musk's business empire must deal with include the Federal Communications Commission for his satellite internet service Starlink, the National Highway Traffic Safety Administration for Tesla, and the Federal Aviation Administration (FAA) for SpaceX.
The FAA, under pressure from Trump, or to curry his favour, could say it's not going to approve any SpaceX launch permits, says Roger Nober, director of the Regulatory Studies Center, also at George Washington University.
For Tesla, for example, Trump could pressure regulators to deny necessary approvals of its autonomous driving program, or could renew investigations into the safety of its full self-driving software, some analysts told ABC News.
"If full self-driving were to be invalidated, that would be a huge hit to Tesla stock and to Musk," Gordon Johnson, CEO and founder of the data firm GLJ Research, told ABC.
Although the courts shouldn't tolerate such actions if they are shown to be vindictive, the president wouldn't necessarily need a "litigation-proof strategy to really mess up" Musk's life, Coglianese said.
It could still be "very painful and problematic" for Musk, while courts sorted out the issues, he said.
"And if Musk's operations get delayed or disrupted, that can mean real money."
Nober says he believes that any lasting regulatory change against Musk's companies would be difficult to implement, given his very public spat with Trump and that the president said he's going to punish his one-time friend.
"If they then initiate regulatory action that's intended punish any of Musk's business… it's going to be vulnerable to challenge on the theory that it was arbitrary," he said.
However, there may be other minor administrative regulatory roadblocks that government agencies could impose on Musk that would be difficult to challenge in court, Nober says.
"They can make life difficult" for Musk, he said.
On Thursday, amid their war of words, shares of Tesla plunged more than 14 per cent, leaving $150 billion US of the electric automaker's value erased by the end of trading day.
The plunge was probably because Tesla, like a lot of Musk's companies, have a lot of little things they deal with, with a lot of regulatory bodies, Nober says.
"Just making those more difficult, or slowing them down, or reviewing them, or taking longer to turn things around, has a cumulative impact," he said.