Musk could lose billions as spat with Trump unfolds
NEW YORK—The world’s richest man could lose billions of dollars in his fight with the world’s most powerful politician.
The feud between Elon Musk and Donald Trump could mean Tesla’s plans for self-driving cars would hit a roadblock, with SpaceX flying fewer missions, Starlink getting fewer satellite contracts and social media platform X losing advertisers.
It all depends on Trump’s appetite for revenge and how the dispute unfolds.
“Since Trump has no history of retaliating against perceived adversaries, he’ll probably just let this pass,” joked Telemetry Insight auto analyst Sam Abuelsamid.
But turning serious, he sees trouble ahead for Musk.
“For someone that rants so much about government pork, all of Elon’s businesses are extremely dependent on government largesse, which makes him vulnerable,” Abuelsamid said.
Probe into Tesla cars
The dispute comes just a week before a planned test of Tesla’s driverless taxis in Austin, Texas—a major event for the company because electric vehicle (EV) sales are lagging in many markets and Musk needs a win.
Trump can mess things up for Tesla by encouraging safety regulators to step in at any sign of trouble for the robotaxis.
Even before the word war on Thursday, the National Highway Transportation Safety Administration (NHTSA) requested data on how Musk’s driverless taxis will perform in low-visibility conditions.
That request follows an investigation last year—after several accidents, including one that killed a pedestrian—into 2.4 million Teslas equipped with full self-driving software.
A spokesperson for the NHTSA said the probe was still ongoing and the agency “will take any necessary actions to protect road safety.”
The Department of Justice has also looked into the safety of Tesla cars, but the status of that investigation is unclear.
Driving away consumers
The promise of a self-driving future led by Tesla inspired shareholders to boost the stock by 50 percent in the weeks after Musk confirmed the Austin rollout.
But on Thursday, the stock plunged more than 14 percent amid the Trump-Musk standoff before recovering a bit on Friday, bouncing back nearly 4 percent.
Besides provoking boycotts of Tesla showrooms, Musk’s foray into right-wing politics also cost sales among environmentally minded consumers who otherwise embraced EVs.
If Musk has indeed ended his close association with Trump, those buyers could come back, but that’s far from certain.
One analyst speculated earlier this year that Trump voters in so-called red counties could buy Teslas “in a meaningful way.” But he’s now less hopeful.
“There are more questions than answers following Thursday’s developments,” TD Cowen’s Itay Michaeli wrote in his latest report, “and it’s still too early to determine any lasting impacts.”
Michaeli’s stock target for Tesla earlier this year was $388. He has since lowered it to $330. Tesla was trading Friday at $300.
SpaceX up in the air
Following his feud with Musk, Trump also said he could cut government contracts to Musk’s SpaceX.
The rocket company that is reportedly worth $350 billion provides launches, sends astronauts into space for the National Aeronautics and Space Administration, and has a contract to send a team next year to the moon.
But if Musk has a lot to lose, so does the United States, as SpaceX is the only US company capable of transporting crews to the International Space Station, using its four-person Dragon capsules.
The other alternative is politically dicey: depending wholly on Russia’s Soyuz capsules.
Musk knew all this when he shot back at Trump that SpaceX would begin decommissioning its Dragon spacecraft. Only several hours later, he backtracked on that threat.
Starlink’s connections
A subsidiary of SpaceX, satellite internet company Starlink appears to also have benefited from Musk’s relationship with the president.
During a trip with Trump to the Middle East last month, Musk announced that Saudi Arabia had approved Starlink for some services.
Starlink had also won deals in Bangladesh, Pakistan and India, among other countries, as Trump began to threaten tariffs.
On Friday, The Associated Press (AP) confirmed that India had approved a key license to Starlink. At least 40 percent of India’s more than 1.4 billion people have no access to the internet.
Big advertisers that fled X after Musk welcomed all manner of conspiracy theories have started to trickle back to the social media platform, possibly out of fear of a conservative backlash.
Musk has called their decision to leave an “illegal boycott” and sued them. But the Trump administration recently weighed in with a Federal Trade Commission probe into possible coordination among these advertisers—who now have to worry about a different danger.
On Friday, Trump told reporters a review of Musk’s government contracts was in order.
“We’ll take look at everything,” the president said. “It’s a lot of money.”
Trump also said he has no plans to speak with Musk, adding that he wasn’t “thinking about” the Tesla CEO.
