United States: Once united in ambition, Donald Trump and Elon Musk now find themselves in open conflict. On Tuesday, Trump fired a sharp warning: he may pull the plug on the vast streams of federal support fueling Musk’s corporate constellation. The two high-profile figures, once political allies, have descended into a full-blown public quarrel, with billions at stake.
This fresh clash ignited after Musk, who previously funneled hefty sums into Trump’s re-election bid, renewed his verbal attack on a Republican-backed tax bill. This legislation targets green energy credits, including those long propping up Tesla, the jewel of Musk’s automotive crown.
“He’s bitter over the looming demise of his EV agenda… He’s rattled, but he’s got a lot more to lose,” Trump stated at the White House, with a smirk not far behind.
Tesla and SpaceX — Musk’s industrial flagships — thrive on a mesh of federal incentives, ranging from consumer tax breaks to lucrative space contracts. The bill in question aims to eliminate key advantages, including EV purchase incentives, which are already under review in the proposed GOP tax overhaul. The financial shockwaves were felt quickly — Tesla’s stock plunged nearly 5% by mid-Tuesday, according to Reuters.
Refusing to retreat, Musk threatened to bankroll a political revolt, hinting at launching a new party and pledging funds to unseat lawmakers backing the bill — a contradiction for a man who once preached lean governance. The legislative process is still dragging through amendment negotiations in the Senate.
While Musk’s grip on Capitol Hill remains foggy, GOP insiders fear the drama could sabotage their 2026 electoral ambitions, especially if the feud casts a shadow over their legislative unity.
Treasury Secretary Scott Bessent dismissed Musk’s accusation that the tax bill would swell the national deficit. “I’ll manage the coffers,” he said curtly.
Musk briefly led the Department of Government Efficiency — known as DOGE — a Trump-era experiment in trimming government excess. However, he pulled out in late May, retreating as friction grew. On Tuesday, Trump used Truth Social to mock Musk’s past gains, saying, “No more rocket launches, no satellites, no EV production — the US would save a fortune.”
He added, “DOGE may just have to turn around and devour Elon.”
Musk, firing back on X, wrote simply: “I am literally saying CUT IT ALL. Now.” He followed up with a cryptic tease: “I could escalate, but I’ll hold — for now.”
Tesla’s Tightrope
The fallout could tighten the noose around Musk’s ventures, especially as Tesla leans heavily on its ambitious robotaxi blueprint — a program still in trials in Austin, Texas. However, this futuristic gamble is tethered to federal and state regulators, who will determine whether driverless, pedal-free, and wheel-free vehicles can hit the streets.
Industry watchers brace for a bumpy earnings report when Tesla unveils its second-quarter figures. European sales offered mixed signals, and Musk’s polarizing political leanings have soured his brand abroad.
Veteran investor Gary Black of Future Fund LLC, who dumped his Tesla holdings amid falling deliveries, voiced concern: “Slashing EV credits would wound Tesla.” On X, he remarked, “Elon should’ve seen this backlash coming after opposing Trump’s ‘big beautiful bill.’”
Tesla’s regulatory credits — a crucial revenue stream — totaled $2.8 billion in fiscal 2024. That stream may shrink drastically if the bill survives. Meanwhile, SpaceX holds an estimated $22 billion in government contracts — a treasure trove now threatened, as reported by Reuters.
Earlier in June, Trump first dangled the idea of stripping Musk’s government perks during a heated digital spat over the tax bill. Analysts say the measure could add $3 trillion to the national debt. That very feud triggered a sell-off that wiped $150 billion from Tesla’s market cap — though the stock later clawed back some ground after Musk softened his tone.
But the reprieve was brief. On Saturday, Musk reignited the fire, branding the bill “insane and destructive” and warning that GOP lawmakers who backed it would “lose their primary next year if it’s the last thing I do on Earth.”
“Musk just can’t stay away from the fire,” said Dennis Dick, chief strategist at Stock Trader Network and Tesla shareholder. “He’s poking Trump again. His overseas sales are already sinking. If the US cuts subsidies too, Tesla’s home base could erode fast.”
In a brutal closing note, Dick summed it up: “Musk needs Trump. Trump doesn’t need Musk.”
As Trump prepared to leave the White House, a reporter asked if he planned to deport Musk, a naturalized citizen.
Trump paused, shrugged slightly, and said, “I don’t know. We’ll have to take a look.”