Trump threatens to axe billions in subsidies for Musk's companies as feud escalates
WASHINGTON: The battle of words between former partners Donald Trump and Elon Musk vividly intensified on Tuesday as the U.S. president issued threats to cut off billions of dollars in federal appropriations that fund Musk's extensive business domain. According to the latest Reuters report, the two magnates, once political cronies, have now overtly turned on each other, with Trump now aiming at Musk's federal support over his condemnation of the Republican-led tax-cut and spending bill, which barely passed the Senate midday Tuesday.
'He can lose a lot more than that,' Trump warned, alluding to Musk's disapproval of the bill that removes electric vehicle (EV) tax incentives, a vital driver of Tesla's advancement. Subsidies, space, and self-driving cars at stake
Although Musk has long asserted that he supports the termination of government aid, Tesla and SpaceX have been key recipients of federal initiatives, from EV tax credits to profitable space launch agreements. Tesla, specifically, has heavily banked on a US$7,500 (S$9,553) consumer EV credit and nearly US$11 billion in regulatory credit sales. The forfeiture of these benefits, forecasters warn, could reduce Tesla's 2024 operating income by up to 17%. In the meantime, SpaceX holds around US$22 billion in U.S. government contracts, and Musk's robotaxi initiative centres on federal endorsement. Trump ridiculed Musk's federal dependence, saying, 'No more rocket launches, satellites, or electric car production, and our country would save a FORTUNE.' See also China avoids trap of war with the US Political fallout and financial ripples
The acrimonious dispute could mean misfortune not only for Musk's businesses but also for the Republican Party. Musk has put forward the idea of creating a new political party and consuming his wealth to oust legislators who supported the tax bill — a move that makes GOP policymakers anxious ahead of the 2026 midterms.
Treasury Secretary Scott Bessent downplayed Musk's warnings, promising to bring about solutions to the rising deficit. Yet Tesla's stakeholder community is nervous. Experienced investor Gary Black recently sold his shares, cautioning that the tax credit pushback would meaningfully damage Tesla's outcome. As smaller EV firms, such as Rivian and Lucid, saw their share prices plummet on Tuesday, the Electrification Coalition advised Congress to reexamine the bill. In the meantime, Musk, on his social platform X, retorted brusquely to Trump's intimidations: 'CUT IT ALL. Now.'
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