Federal Subsidy War Explodes: Trump Threatens Musk’s Billions as Tesla, SpaceX Shares Plunge
Musk and Trump clash over government contracts and subsidies—billions on the line for Tesla and SpaceX as their feud heats up in 2025.
- Tesla stock fell 14% after Trump’s remarks.
- SpaceX received $3.8B in federal funds in 2024.
- Tesla earned $2.8B from regulatory credits in 2024.
- Key government bills would slash $1.2B more from Tesla in subsidies.
A dramatic battle is playing out at the highest levels of business and politics. President Trump threatened Thursday to axe federal subsidies and government contracts to billionaire Elon Musk’s companies—an unprecedented move that could upend the future of American innovation and the stock market.
Musk, America’s wealthiest man, fired back swiftly, promising to shut down SpaceX’s key spacecraft program if Trump’s threats become reality. The stakes? Tens of billions of dollars, the future of the Artemis lunar missions, and the fate of hundreds of thousands of jobs.
Who will blink first, and what does it mean for the world’s race to the moon and the electric age?
What’s Triggering the Trump-Musk Feud?
The controversy started with Trump’s Thursday statement on Truth Social. He pledged to cut “Billions and Billions of Dollars” by ending subsidies and contracts for Musk, casting the move as an easy budget fix.
Musk’s response: SpaceX would begin “decommissioning its Dragon spacecraft immediately” if such cuts go through—a move that could crater NASA’s ability to get astronauts to the International Space Station or to the moon.
Investors didn’t wait. Tesla shares nosedived 14% in a single day, wiping out tens of billions in market value. And the political world is reeling.
How Dependent Are SpaceX and Tesla on Federal Money?
SpaceX: Over the last decade, Musk’s private space venture has received tens of billions from the U.S. government, including $3.8 billion in 2024 alone. Most of this funding comes from NASA, including high-profile Artemis lunar lander contracts. The company also wins big Pentagon launch deals and a multi-billion-dollar contract to overhaul the FAA’s air traffic systems via its Starlink satellite division.
Tesla: While less reliant on direct government funds, Tesla reaps enormous benefits from state and federal environmental credits. Last year, Tesla banked $2.8 billion by selling regulatory credits to legacy automakers. Customers lean heavily on the $7,500 federal tax credit for EV purchases—a program threatened by Trump-backed legislation. Meanwhile, renewable energy tax credits keep Tesla’s solar and battery businesses growing.
Why Could the “One Big Beautiful Bill Act” Change Everything?
Trump’s policy hammer, the so-called One Big Beautiful Bill Act, has already sailed through the House and faces a crucial Senate vote. This sweeping legislation could:
– Slash or end renewable energy tax credits
– End the $7,500 EV tax credit, risking a $1.2B hit to Tesla
– Remove California’s emissions credit waivers—costing Tesla up to $2B
– Restrict federal contracts for green companies
If signed into law, the entire landscape for clean energy and private space may shift overnight.
What Would Happen If SpaceX Pulled Its Dragon Capsule?
No company beats SpaceX in low-cost, reliable astronaut launches. If Musk makes good on his threat to pull the Dragon program, NASA could lose its only American ride to the International Space Station and lunar missions would grind to a halt. Boeing’s Starliner still lags behind, and NASA isn’t keen to return to buying Russian rockets.
A NASA spokesperson confirmed the agency will continue to work with industry partners to ensure U.S. space goals are met—but losing SpaceX would be a devastating blow.
What’s Next for Tesla, the Electric Car Giant?
Tesla insists it can outlast an end to subsidies, but Wall Street isn’t so sure. The company’s profits are deeply intertwined with both state and federal programs. An abrupt end to tax credits could shake the U.S. EV market and put American energy independence at risk.
Musk slams Trump’s agenda as a costly disaster, but analysts suggest the pain may hit Tesla’s rivals even harder—since few legacy automakers can sell emissions credits at scale.
For additional context on the electric vehicle industry, visit Reuters. To explore the world’s space race, check out SpaceNews.
Will Trump and Musk Settle, or Is This War?
Just a year ago, Musk and Trump were allies—Musk even helmed a cost-cutting team for Trump’s administration. Now, their public feud is shaking global markets. While past spats fizzled, this time, with billions and critical technology on the line, the rift could run deep.
How Can You Follow the Fallout?
– Keep tabs on CNBC for daily stock updates
– Read the latest federal policy moves at WhiteHouse.gov
– Track upcoming Senate votes on energy and tech policies
Don’t miss the next twist in this high-stakes showdown: Follow breaking coverage, and get informed so you can understand how politics and tech will shape America’s future.
Checklist: What to Watch Next
- Senate vote on the One Big Beautiful Bill Act
- Tesla’s next quarterly earnings update
- SpaceX mission status and NASA responses
- New executive orders or policy shifts from the White House
- Public statements from Musk and Trump on their next moves
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