Musk vs. Trump: Tesla Has The Most To Lose

Elon Musk’s dramatic and very public fallout with President Donald Trump last week could have serious business consequences, particularly for Tesla. The rift started when Trump unveiled his “Big, Beautiful Bill,” a sweeping tax-and-spend plan that Musk blasted on X as a “disgusting abomination” that would balloon the national debt. Musk’s outburst caught the markets unawares, given that he reportedly poured nearly $300 million into Trump’s 2024 Presidential run and just resigned as a close advisor to the President a little over a week ago. Trump fired back at Musk, via his social media platform, and even threatened to “terminate” federal aid to Musk-run companies. Tensions escalated when Musk posted—and then deleted—a claim linking Trump to sealed Jeffrey Epstein documents. While Trump briefly softened his tone, saying he “wished Musk well,” he later warned of “very serious consequences” if Musk supported Democrats in the 2026 midterms. Now out of favor with the President, Musk faces a real risk. Trump still holds the power to reshape policy in ways that could damage Musk’s vast business interests, particularly Tesla, which lacks the federal contract protection that SpaceX has as a key partner of NASA and the Space Force.

Tesla’s Quiet Reliance on Government

The Big, Beautiful Bill directly threatens Tesla on multiple fronts. The bill would terminate the $7,500 federal EV credit by the end of 2025, making Tesla cars less affordable. Trump also plans to eliminate EV mandates and emissions regulations that have allowed Tesla to profit from regulatory credits. These credits have contributed over $8 billion to Tesla’s top line thus far. A proposed annual fee of $250 for EVs and $100 for hybrids could further dampen consumer interest in EVs, such as those from Tesla. The spat with Trump could only exacerbate Tesla’s problems. Tesla stock declined by 14% last week. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P and clocked >91% returns since inception.

Tesla’s dependence on public support has been more significant than it might appear. A Washington Post investigation estimated that Musk’s companies – Tesla and SpaceX have secured at least $38 billion in public money, including about $6.3 billion pledged in 2024 alone. Tesla’s early funding lifeline came in the form of a $465 million low-interest loan from the Department of Energy in 2010 that financed the development of the Model S and the Fremont plan. The regulatory credits then bridged years of losses until the company finally turned consistent profits from its core automotive operations. Tesla is on a firm financial footing for sure, having repaid its loans and generating positive cash flow. However, the Musk–Trump feud threatens the tax credits, infrastructure grants, and regulatory environment that have long supported its valuation.

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