Trump Supports Musk, Endorses Tesla and SpaceX as Crucial for America's Prosperity
Under the Trump administration, a significant shift in federal subsidies for Elon Musk's companies, Tesla and SpaceX, has taken place. While SpaceX continues to secure lucrative government contracts, the administration has scaled back or ended subsidies that supported Tesla and other clean energy initiatives.
In a twist of events, President Trump stated that he has no intention of "destroying" Musk's companies. However, Musk disputed this, clarifying that the subsidies Trump referenced "simply do not exist" anymore because the Trump administration had already scrapped or let expire all clean energy incentives beneficial to Tesla, while leaving oil and gas subsidies untouched. This decision has already impacted Tesla's sales, with a 14% drop in deliveries.
Musk's SpaceX, on the other hand, has continued to secure substantial government contracts, particularly from NASA, for missions like ferrying astronauts to the International Space Station and developing lunar landers under the Artemis program. Musk claims SpaceX operates more efficiently with less funding and that rerouting contracts away from SpaceX would be costlier and risk astronaut safety.
Since 2008, SpaceX has secured over $22 billion in U.S. government contracts, primarily with NASA, the U.S. Air Force, and Space Force. However, the Trump administration's review of SpaceX's contracts could potentially impact the company's future projects.
The tension between Trump and Musk has escalated, sparked by Trump's "One Big Beautiful Bill Act" (OBBBA), which could significantly impact electric vehicle (EV) incentives. Musk has openly criticized the Trump administration's budget policies, calling them a "disgusting abomination" on social media.
In response to criticism, Trump has threatened to review and potentially cut contracts tied to Musk's companies, prompting a heated public exchange with the Tesla CEO. Trump, in a Truth Social post, wants Musk's businesses to "THRIVE like never before." However, Musk has warned that Tesla's profitability could be hurt by the provisions affecting battery costs and consumer demand in the OBBBA.
Musk's AI startup, xAI, is involved in a defense-focused artificial intelligence project funded by the Pentagon, adding another layer to the complex relationship between the Trump administration and Musk's businesses.
The ongoing feud between Trump and Musk comes at a challenging time for Tesla, as the company reported a 12% drop in revenue and a 16% decline in net income for the second quarter. Tesla's stock tumbled nearly 9% in after-hours trading following the second quarter report.
As the situation unfolds, it remains to be seen how the Trump administration's decisions will impact Tesla and SpaceX in the long run.
- Despite the Trump administration's actions to scale back subsidies for Tesla, Elon Musk has expressed concerns over the potential impact of the "One Big Beautiful Bill Act" on his electric vehicle company due to provisions affecting battery costs and consumer demand.
- While Tesla has faced challenges during the Trump administration, Musk's SpaceX has continued to benefit from significant government contracts, particularly from NASA, with the ongoing Artemis program being a key project.
