The damage reached a fever pitch on Thursday (UST) when the Musk-Trump feud erupted out in the open. In a matter of hours, Tesla shed more than US$150 billion ($249b) in market capitalisation, wiping US$34b from Musk’s personal fortune.
The alliance with Trump was supposed to have been Tesla’s golden ticket, even if the administration was going to scrap tax credits that had helped it become an automobile juggernaut.
More importantly, Musk could count on Trump’s blessing for his ultimate vision: putting fully autonomous vehicles on American roads.
This ambition has been stymied by government regulation over the years, with authorities slowing efforts because of worries that the technology is not ready to hit the road at mass scale.
The Trump administration was expected to lift these regulatory constraints – a promise now in serious jeopardy.
“Musk needs Trump because of the regulatory environment, and you can’t have Trump go from friend to foe,” said analyst Dan Ives of Wedbush Securities.
The administration also regulates vehicle design and would influence the mass production of robo-taxis that Musk intends to launch in a pilot programme in Austin, Texas this month.
Musk’s hard-right political pivot has alienated the very customers Tesla needs most: environmentally conscious and liberal-leaning buyers who once saw the brand as aligned with their values.
Some drivers have resorted to bumper stickers declaring their cars were purchased “before Elon went crazy”.
The damage is showing up in sales figures.
In Europe, while overall electric vehicle sales climbed, Tesla’s market share crashed 50% in April as attention focused on Musk’s political activities and the company’s ageing product line-up.
A recent Morgan Stanley survey said 85% of investors believe Musk’s political involvement is actively harming Tesla’s business.
SpaceX
A prolonged battle with Trump poses existential risks for SpaceX, Musk’s space exploration company that has become Nasa’s most critical partner.
SpaceX and Nasa are deeply interdependent. SpaceX depends on US Government contracts worth tens of billions of dollars, while Nasa relies on SpaceX for everything from astronaut transportation to satellite deployment.
SpaceX’s portfolio includes some of the most sensitive national security projects: launching astronauts to the International Space Station, building spy satellites and operating the Starlink satellite network.
The financial windfall has been enormous, with a December share sale valuing SpaceX at US$350b – US$140b more than just six months earlier, largely because of anticipated Government largesse under Trump.
In the heat of the clash late last week, Trump threatened to cut off all US Government contracts, while Musk said he would mothball the Dragon spacecraft, which is vital for ferrying astronauts to and from the International Space Station – though he later walked back this threat.
xAI
Musk has huge plans for his xAI artificial intelligence (AI) company. He’s angling to compete with OpenAI, the ChatGPT-maker that was co-founded by Musk a decade ago and is now steered by his arch-rival Sam Altman.
Altman has his own inroads to the White House, where he signed a massive AI infrastructure initiative called the Stargate Project, which recently expanded to Saudi Arabia and Abu Dhabi.
Initially dismissing Stargate as unrealistic, Musk later worked behind the scenes to undermine the project, reportedly telling investors that Trump wouldn’t approve any expansion that excluded xAI.
Adding another layer of complexity, Musk folded X (formerly Twitter) into xAI earlier this year.
Musk’s US$44b acquisition in 2022 transformed the site into the go-to platform for conservatives, but Trump himself remains an infrequent user, preferring his own Truth Social platform for communication.
– Agence France-Presse
