Government could potentially terminate business deals and financial support for Musk's enterprises amid escalating disputes.
Government Threat to Tesla and SpaceX: Trump Takes on Elon Musk
feeding his feud with tech kingpin Elon Musk, former President Donald Trump hinted at severing ties with Musk's businesses, targeting the subsidies and contracts that his companies, principally SpaceX and Tesla, have long relied on.
Trump's tweet on Truth Social read, "Slash government spending, save billions, drop Elon Musk's subsidies. Can't believe Biden didn't do it."
Estimates revolve around the staggering sum of $38 billion in government benefits gained by Musk's enterprises, with SpaceX President and COO Gwynne Shotwell claiming that SpaceX alone pocketed $22 billion in federal funding. The exact figure, however, remains hush-hush due to the clandestine nature of many contracts, as reported by Reuters.
NASA's relationship with SpaceX is vital, as they rely on SpaceX for transporting astronauts to and from the International Space Station. At present, the only alternative option is a $90 million seat aboard Russia's Soyuz capsule.
Last year, SpaceX was commissioned to develop a vehicle that would safely de-orbit the International Space Station in 2030, a project expected to see SpaceX heavily involved in NASA's future space missions, including returning astronauts to the moon and traveling beyond to Mars.
Undeterred by Trump's warning, Musk announced plans to decommission SpaceX's Dragon spacecraft, which regularly ferries astronauts and cargo to the ISS, via a post on his social media platform. NASA maintained that they will continue to execute the President's space vision and work with their partners to meet the President's objectives.
Tesla, on the other hand, has enjoyed approximately $11.4 billion in regulatory credits, though a significant portion is attributed to state-level subsidies. Musk has declared that he no longer requires the credit, insisting that it primarily benefits his rivals. Shares in Tesla plummeted following Trump's post, having already fallen 8% during the escalating social media spat. SpaceX, being privately held, does not have publicly traded shares.
Trump's verbal swipe came amid an explosive exchange with Musk, who had spent over $250 million on Trump's election campaign. Frustrated by Musk's criticism of the Republican spending bill that is making its way through Congress, Trump expressed "disappointment" during a White House meeting. Musk denounced the bill as a "disgusting abomination," citing concerns over worsening the U.S. fiscal deficit.
The back-and-forth between Trump and Musk unfolded on Musk's social media platform, X, where Musk criticized Trump and other Republican politicians throughout the day. This sudden turn of events could pose a significant challenge for Tesla, especially given its shrinking global sales and a 25% loss in share value this year.
Additionally, Trump's threat resurrects the specter of pending government investigations into Musk's firms. In April, a Senate Homeland Security report estimated potential federal liabilities of $2.37 billion for Musk's businesses when Trump took office in 2017[1]. Since then, many investigations have been halted or dropped with the advent of the Department of Government Efficiency, which Musk previously headed, dismantling several agencies scrutinizing his businesses[1].
- The potential loss of government subsidies, amounting to $38 billion for Elon Musk's businesses, SpaceX and Tesla, could significantly impact their financial stability, according to estimates.
- The controversy surrounding funding for Musk's businesses has also extended to the political sphere, with Trump suggesting a reduction in government spending on these companies, a proposal that may impact general news and business discussions.
- The technology sector, particularly SpaceX, has been heavily relied upon for crucial projects, such as the transport of astronauts and future space missions, making the funding debate a critical topic in both business and politics.
