Musk risks losing govt contracts worth billions as Trump feud reignites

Business Standard

02-07-2025

Elon Musk may find out what happens when DOGE bites man.
The billionaire SpaceX, Tesla and X owner who catapulted his zealous embrace of President Donald Trump into a powerful position slashing government spending now risks sweeping cuts to his own bottom line after resuming the feud that led to their very public bitter split last month.
Musk's renewed heckling of Trump's big tax breaks and spending cuts bill, which passed the Senate on Tuesday, threatens to put billions of dollars of his government contracts in jeopardy if Trump retaliates.
The rupture of their tenuous peace has resulted in a wobbling of the stock price of a market-moving company and led the president to muse about deporting Musk to his native South Africa.
In a Frankenstein-style twist, as Musk volleyed fresh critiques about the cost of Trump's signature legislation, Trump mused Tuesday about turning Musk's Department of Government Efficiency back on its creator.
DOGE is the monster that might have to go back and eat Elon, Trump told reporters as he left the White House for a tour of a new immigration detention centre in Florida.
Trump also suggested in an early morning social media post that if Musk lost his government contracts, he would probably have to close up shop and head back home to South Africa.
Asked by a reporter later if he would deport Musk, Trump paused and said, I don't know. We'll have to take a look.
In response, Musk wrote on X: So tempting to escalate this. So, so tempting. But I will refrain for now. Tesla and SpaceX did not respond to messages seeking comment about their CEO.
Musk has called Trump's big bill a financial boondoggle for America that would kill jobs and bog down burgeoning industries. He's not limiting himself to harsh assessments on social media.
On Monday, he threatened to reinsert himself into politics and try to oust every member of Congress who votes for the bill.
They will lose their primary next year if it is the last thing I do on this Earth, Musk said in one post.
In other posts, he branded Republicans the PORKY PIG PARTY!! and threatened to create a new political party.
Trump has said Musk is actually irritated by the legislation's dramatic rollback of the Biden-era green energy tax breaks for electric vehicles and related technologies. Musk has denied this, but the rollback could hurt Tesla's finances.
Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa, Trump wrote in a post on his Truth Social media network.
Musk became a US citizen in 2002, according to a biography of him by Walter Isaacson. It's unclear if Trump would take the extraordinary step of having the government explore the rare process of removing his citizenship, known as denaturalisation.
Musk's rocket and satellite company, SpaceX, is also in Trump's crosshairs.
No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE, Trump said in his post. BIG MONEY TO BE SAVED!!! SpaceX has received billions of federal dollars to help to send astronauts into space and other work for NASA, including a contract to send a team from the space agency to the moon next year.
But the most immediate fallout of their feud was the tumbling stock in Tesla down 5% in early afternoon trading Tuesday.
Tesla stock's performance can have an outsize impact on the stock market index funds in which millions of Americans 401(k)s have invested their retirement savings.
The electric vehicle maker is one of the Magnificent Seven, the group of companies that includes Apple and Google parent Alphabet and that account for about a third of the value of the S&P 500.
Musk's social media outbursts come at a delicate time for his car company. Tesla is just a week into its test run of its self-driving robotaxi service in Austin, Texas.
Musk needs that test to succeed if he hopes to make good on his promise to investors that he will be able to quickly offer the service in other cities over the next few months.
One possible hurdle to that: federal safety regulators.
The National Highway Traffic Safety Administration requested information from Tesla last week after videos began circulating on social media of a few of its autonomous cabs in Austin driving erratically, including one heading down an opposing lane.
That followed a NHTSA request for data last month on how the driverless taxis will perform in low-visibility conditions, which itself followed an investigation last year into 2.4 million Teslas equipped with full self-driving software after several accidents, including one that killed a pedestrian.
Musk needs robotaxis to take off because Tesla's main business of selling cars is going poorly.
Musk has acknowledged that boycotts by people angry with his political views have hurt sales, but he has largely blamed a less frightening, temporary factor: People are so excited about Tesla's forthcoming latest version of their Model Y SUV that they decided to hold off on purchases for a few months.
But now that new version is available, and sales are still tanking. Figures out last week showed sales in Europe plunged 28% in May over the prior year, the fifth month in a row of big drops.
A new batch of sales data for other parts of the world, including the US, is coming out Wednesday.
The irony is that Musk's social media spat with Trump threatens his businesses from both sides. People won't buy his cars because of the memories of his friendship with Trump, and now that and his other businesses could get hurt because that friendship has soured.
In a bizzarro world, he's alienated both sides, said Dan Ives, a Wedbush Securities financial analyst. It's seems impossible, but he's actually done it.