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Elon Musk helped finance Donald Trump's return to power with
nearly $288 million in donations.
Now, less than six months later, Musk is watching that investment
destabilize his whole empire. Now, the alliance between the
two men began as a mutual beneficial transaction.
Musk funneled money into Republican campaigns and super
PAC's, betting on Trump's re election to secure policy
advantages and also business leverage.
Tesla stocks surged after Trump's victory in November.
SpaceX faced fewer regulatory hurdles, and Musk's influence in
Washington reached a new peak. Now, after a sudden and ugly
public fallout, the billionaire is totally exposed.
Trump threatened to cancel federal contracts tied to Musk's
companies. That threat carries real
consequences because Musk relies heavily on government funding
and Trump has the tools to interfere.
Now the white households discretionary control over
billions in federal contracts and tax credits.
Trump reminded Musk of that power in a statement last week,
warning of very serious consequences if Musk supported
Democrats. Now, Musk hasn't endorsed anyone
for 2028, but he has hinted at starting his own third party
now. The comment, according to
sources close to the administration, irritated Donald
Trump, who views political loyalty as transactional.
Musk tried to dial things down over the weekend but deleted a
series of attacks he posted about Trump on X.
But the damage has already been spreading across Musk's business
empire. SpaceX and Tesla all feeling it.
But Tesla lost $34 billion in market value after the feud
became public, according to Bloomberg's Billionaires Index.
The loss is the second biggest single week decline in the
index's history. The sell off erased months of
gains and rattled Tesla shareholders, many of whom have
grown frustrated with Musk's political distractions.
And Tesla shares are down more than 20% this year, and its
quarterly profits fell 71% compared to the same period last
year. Analysts traced the slide to
slumping EV demand and political backlash.
And Trump's new tax plan aims to eliminate the $7500 EV credit,
which is a move that could cost Tesla $1.2 billion in annual
revenues, according to JP Morgan.
Tesla's financial downturn comes as Musk faces mounting federal
scrutiny. The National Highway Traffic
Safety Administration recently asked Tesla to provide detailed
plans for its robo taxi launch, citing safety concerns.
Now, the company has several active investigations related to
its Autopilot and Full Self Driving software going on.
And these probes began under the Biden administration but also
remain ongoing under Trump. And if Trump decides to increase
pressure, he has tools to stall permits or ramp up regulatory
reviews. That creates more unnecessary
uncertainty for Tesla at a moment when investors are
already uneasy. Meanwhile, Elon Musk is
attempting to shift public focus back to the product side.
Tesla is preferring to unveil his robotaxi in Austin this
week, and Musk has teased this event on X, claiming the company
is now testing self driving. Model Y is on the streets.
He hopes the launch will improve sentiment around Tesla and
rebuild investor confidence, But internal pressure is mounting.
A coalition of activist shareholders sent a letter last
week to Tesla's board chair demanding that must commit at
least 40 hours per week to Tesla alone, and the group accused him
of neglecting his duties while chasing political ambitions and
running unrelated businesses. Brad Lander, who overseas the
New York City public pension system, criticized Musk's recent
actions after Thursday's Tesla stock drop.
The pension fund, which holds more than 3,000,000 Tesla
shares, lost over $150 million in one day.
Lander, who is also running for New York City mayor, called the
feud a disaster and said Musk's political obsession has created
direct financial harm to many investors.
His comments reflect growing discontent among institutional
shareholders, who once praised Musk's risk taking but now see
it as erratic and also see him as a reckless individual.
And beyond Tesla, Musk's other companies face similar threats
from Donald Trump. SpaceX relies on federal
contracts to launch NASA astronauts and Pentagon
satellites. Trump's threat to cancel those
contracts sent a chill through SpaceX.
Officials at NASA and the Department of Defense privately
acknowledged that terminating existing SpaceX deals would be
logistically difficult. Still, they have started urging
competitors to accelerate development as a hedge.
SpaceX remains the only active U.S. company with the ability to
launch humans into space, but officials say they do not want
to be held hostage by 1 supplier now.
Analyst Ross Gerber, a longtime Musk supporter turned critic,
estimates that SpaceX would lose half its valuation if it lost
access to federal money. The company has built a
lucrative commercial business, but it's more consistent and
high paying client is still the US government.
Any disruption in those contracts would ripple through
Musk's entire operation from * lake expansion to Starship
development. Gerber also warned that Musk's
current behavior is damaging relationships with regulators
and customers. He reduced his Tesla stake last
week. Suddenly that he called Musk
self-destructive leadership style.
And I don't know if you remember this, but at the beginning of
Starship development, the FAA and SpaceX were always kind of
at odds. SpaceX would be done with a part
of the mission so they could fly the actual ship, but it would
take the FAA months to regulate that one launch and they went
through numerous cycles of a Starship in one go from the FAA.
So if anything happens with this administration to slow down
Starship development, that means that SpaceX and NASA won't be
getting astronauts to the moon anytime soon if they delay
Starships. Now, let me let me back this up
a little bit. SpaceX will need to test 100
Starships before they get to the moon.
They need to be able to refuel in orbit.
They need to be able to orbit the Earth properly.
They need to be able to get a Starship to the moon, land it on
the moon, and then take off from the moon into lunar orbit, where
they will meet up with another craft and that craft will take
the astronauts back down to Earth.
Now, if they're slowed down, Spacex's Lander, the lunar
Starship, the HLS contract Starship is slowed down in
development cycle. This means that SpaceX probably
won't get to the moon in the next 6-7 years, and that's not a
good thing. SpaceX is on flight 10, next of
Starship. The last three flights have been
a disaster. There has been explosions of the
ship for the last three ship flights.
The booster exploded last time because they were pushing it
towards its limits and they pushed it past the limits, which
was kind of expected. But the ship, they thought they
had everything fixed, but apparently either something else
was wrong or they didn't have the same problem fixed and the
thing exploded. So right now SpaceX is trying to
get back into the cycle of actually testing the ships in
orbit so they can eventually send it or sorry sorry to
orbital velocity until someday they will make Starship in
orbit, place it in orbit and they'll orbit the earth a few
times and come back down in the ocean probably.
So if they can succeed in the next few missions, I can see
that happening in the next within the next 5 missions.
They are also want to do a star link drop off in space and if
they get that done, that's a huge step as well because then
they can launch Starships and Starlinks at the same time, make
money from the Starlinks and also test Starships at the same
time. So when SpaceX is going to do
the next round of testing after ship, after the flight 10,
flight 11, flight 12, flight 13, we're expecting bigger things
from them, more kind of experimental things from them,
because right now they just have to make it to orbital velocity
and make it back down to the Indian Ocean.
But you know, it's not just about SpaceX or Tesla must has a
hands and a lot of things, XAI and brain tech from Neuralink
also depend on clear pathways through highly regulated,
regulated sectors. X AI competes directly with Open
AI, Anthropic and Google DeepMind, and all of which have
relationships in Washington and teams focused on policy
compliance. All of those people in those
companies, they're kind of quiet, unlike Elon Musk who
likes to speak his mind and likes to be a free speech
absolutist. Of course, on X, where he can
say anything he wants without repercussions until there are
repercussions, and Neurolink, which works on brain computer
interfaces, must secure approvals from the Food and Drug
Administration and maintain trust with medical institutions,
Any perception of political instability at the top of Musk's
empire could delay approvals or dry up strategic partnerships.
Now, as those sectors mature, though, policy risks will rise
because they're going to be doing more invasive and higher
tier things, so the policy risks will not fall.
And Trump's campaign aligned closely with Musk throughout
2023 and early 2024. And Trump appointed Musk to Lee
Doge, which is an economic advisory panel, and he's invited
him to many of his events, invited him to Mar a Lago.
Tesla was featured prominently during a March White House event
celebrating electric vehicles. Trump personally test drove one
of the company's red model wise and.
He still has it at the White House, he says.
He's not getting rid of it. The public embrace stood in
stark contrast to the Biden administration, which
consistently excluded Tesla from clean energy events.
Now, the change gave Musk and his company's rear inside track.
But that track now looks far more precarious.
But it also looks like Elon and Trump may be making up.
We're going to keep you abreast of that situation of the few
days coming forward. And Musk's original plan was to
gain access, reduce regulation and redirect subsidies towards
his businesses. And that that unraveled current
public feud has not only raised billions in market value for
harder, hard working people that earn that money to invest in his
companies and invest in Elon. Now this is the person that once
walked into Washington as a kingmaker, and now he faces
potential retaliation from the same system that he tried to
game. Hey, thank you so much for
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