In the United States , the once-cozy relationship between Donald Trump and Elon Musk has devolved into a public clash. This conflict, far from being merely a Twitter spat, has significant implications for Musk’s major ventures, which include Tesla , SpaceX , and his latest endeavor in artificial intelligence, xAI .
As the former president leverages government resources against his adversaries, Musk’s companies may soon find themselves facing unprecedented regulatory and financial hurdles.
Tesla: The Electrical Threatened by Short-Circuiting
Already grappling with a dramatic decline in international sales, Tesla could be the first to suffer from this escalating feud. In May alone, registrations plummeted by 67% year-on-year in France , 36% in Germany, and over 45% in the United Kingdom. Analysts attribute this decline to intensifying Chinese competition and a boycott from some consumers. However, it is in the legislative arena where the real danger lurks. Trump’s budget proposal aims to eliminate the $7,500 federal tax credit for electric vehicle purchases.
“This is a threat to the entire electric vehicle sector in the United States,” warns an analyst cited by the Wall Street Journal, foreseeing a potential demand contraction of 30% to 40% . Even more concerning, Trump signed a decree in early April canceling a key mechanism in Tesla’s business model: the California carbon credit system . This system allowed the manufacturer to sell approximately $2 billion worth of credits annually to more polluting brands.
SpaceX: Federal Contracts Under Scrutiny
The crown jewel of Musk’s ventures, SpaceX , could face backlash as well. According to AFP , the public contracts secured by the company since its inception exceed $22 billion , as noted by Reuters . With clients like NASA and the Department of Defense , the U.S. government has long been SpaceX’s primary customer, with billions in future commitments already signed.
However, this dependence could turn against the company. Trump has made it clear he will not hesitate to use government tools to weaken those he perceives as enemies. Another area of vulnerability is Starlink , SpaceX’s subsidiary that deploys thousands of satellites to provide global internet coverage. Sensitive contracts with federal agencies are currently under negotiation, and political intervention could easily derail these discussions or halt their implementation.
xAI: Excluded from U.S. AI Diplomacy
Launched in the summer of 2023 , xAI is Musk’s latest innovation in the world of generative artificial intelligence . With this startup, the billionaire aims to rival OpenAI and promote his vision of a “free” and “open-source” AI. However, xAI’s international ambitions are also jeopardized by the cooling relations with the White House .
According to CNBC , Musk attempted, in May, to force xAI’s inclusion in a large-scale digital infrastructure project run by OpenAI and backed by the United Arab Emirates . He even suggested that Trump would only validate the agreement if his startup was included. This diplomatic pressure attempt failed and might backfire. It is crucial to note that the Trump administration views AI as a strategic leverage point. In this context, Washington encourages allied countries to prioritize American technologies, a move some media already label as “AI diplomacy.” If xAI were to be excluded from this framework, it would find itself sidelined.
A High-Cost Showdown for Elon Musk
Beyond industrial stakes, this crisis has already had severe repercussions on the stock market. In the days following the initial confrontations between the two men, Tesla’s stock fell by 14% , erasing $152 billion in market capitalization. Musk’s personal fortune was slashed by more than $34 billion in just one week, according to Bloomberg . Even Musk’s most loyal investors are beginning to question the billionaire’s confrontational strategy.
Despite this escalation, some observers glimpse a potential reconciliation. Financier Bill Ackman has proposed mediating between the two billionaires, as detailed by Business Insider . Musk has publicly endorsed this idea on X, but Trump has thus far rejected any extended hand. Time will reveal whether this crisis signifies a definitive break or merely a chapter in the ongoing political and economic saga featuring these two prominent figures.