Trump Threatens to Cut Off Federal Support for Musk’s Tesla and SpaceX
Synopsis
U.S. President Donald Trump threatened to withdraw federal support and subsidies for Elon Musk’s companies, including Tesla and SpaceX, as tensions between the two powerful figures publicly escalated. This decision was made after Elon…
U.S. President Donald Trump threatened to withdraw federal support and subsidies for Elon Musk’s companies, including Tesla and SpaceX, as tensions between the two powerful figures publicly escalated. This decision was made after Elon criticised Trump’s $3.3 trillion tax and spending bill, which passed the Senate earlier in the day.
Trump said Musk has received more government help than any person in history, and suggested cutting some support would save the country billions. “No more rocket launches, satellites, or electric car production. Our country would save a fortune,” Trump said.
Musk Responds as Tesla Faces Key Business Challenges
Musk responded to Trump’s threats on his social media platform X, saying, “I am literally saying cut it all. Now.” He also hinted that he might escalate the feud, but said, “I will refrain for now.”
The timing is especially critical for Tesla, which is facing a global decline in sales and betting on the success of its upcoming robotaxi program. The company is expected to report second-quarter delivery numbers on Wednesday, with analysis predicting a tough quarter. J.P. Morgan has estimated that losing the EV tax credit could reduce Tesla's profits by 17%.
Musk’s SpaceX, which holds around $22 billion in US federal contracts, could also be impacted if the issue continues. Tesla has also earned billions from selling regulatory credits to automakers that fall short of emissions targets, without which it would have reported a loss last quarter.
Political Fallout Could Impact the 2026 Elections
Musk has threatened to launch a new political party and support opponents of lawmakers backing the tax bill. His fallout with Trump after once being very good allies is raising concerns among Republicans heading into the 2026 midterm elections.
Meanwhile, Tesla investors and EV advocates are pressuring lawmakers to revise the bill to protect the EV industry. As Musk and Trump continue the public issue, the future of Tesla’s growth and its federal backing hangs in the balance.
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At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
