NEW YORK — The epic clash between two colossal figures—Elon Musk, the world’s wealthiest man, and Donald Trump, the world’s most formidable politician—might put Musk’s vast ventures in jeopardy.
The ongoing feud could stall Tesla’s advances in autonomous vehicles, reduce SpaceX’s NASA contracts, lessen Starlink’s international agreements, and decrease advertisers on the social media platform, X. However, the ramifications will heavily hinge on Trump’s inclination for retribution and the unfolding dynamics of their discord.
Telemetry Insight’s auto analyst, Sam Abuelsamid, humorously remarked, “Since Trump never retaliates, Musk might escape unscathed.” Switching to a more serious tone, he added, “Elon might face challenges due to the significant dependency of his enterprises on government support.”
While both Trump and the federal government could encounter setbacks from this feud, Musk has much more to potentially lose.
**Tesla’s Autonomous Ambitions**
The timing of the spat is critical, occurring just before Tesla’s significant testing of driverless taxis in Austin, Texas. As sales of electric vehicles face challenges, this pivotal event is crucial for Tesla’s market strategy.
Trump could disrupt these plans by urging federal safety authorities to intervene if the robotaxis show any signs of malfunction.
The National Highway Transportation Safety Administration (NHTSA) had preemptively asked for information regarding the performance of Tesla’s autonomous vehicles in adverse conditions. This request follows ongoing investigations from 2022 into Tesla’s full self-driving software after accidents, including a fatal pedestrian incident.
A spokesperson for the NHTSA confirmed the investigation’s continuation, stressing the agency’s commitment to maintaining road safety. The Department of Justice has also probed Tesla vehicle safety, though updates remain unavailable. Despite these inquiries, investors enthusiastically propelled Tesla’s stock upward by 50% after Musk announced the Austin launch. Nevertheless, the stock drastically slid by over 14% amid Musk’s face-off with Trump, albeit recovering slightly the following day.
Morningstar analyst Seth Goldstein commented on this, remarking, “Tesla’s recent surge was largely driven by enthusiasm over robotaxis. Musk’s altercation with Trump might sour sentiment.”
**Impact on Carbon Credits**
An underestimated yet crucial part of Tesla’s revenue that might suffer is the sale of carbon credits.
During the Musk-Trump exchange, Republican senators proposed alterations to Trump’s budget, potentially removing penalties for gas-powered vehicles failing fuel efficiency benchmarks. Tesla benefits significantly from selling “regulatory credits” to other car manufacturers to counterbalance their inefficiencies.
Though Musk often downplays this segment, cutting these credit sales could adversely impact Tesla, especially with prior consumer boycotts related to Musk’s political engagements. In the first quarter, credit sales spiked a third to $595 million, contrasting with a dip in overall revenue.
**Revitalizing Sales**
Musk’s foray into right-leaning politics deterred environmentally conscious customers, leading to Tesla showroom boycotts.
If Musk distances himself from Trump, it might allure ecologically motivated buyers once more, but certainty remains elusive.
Earlier speculation suggested Trump supporters from “red” counties might significantly offset these losses by purchasing Teslas, yet this optimism has waned. “Current developments only breed uncertainty,” wrote TD Cowen analyst Itay Michaeli, who adjusted his Tesla stock target from $388 to $330. By week’s end, Tesla traded at $300.
**Space Exploration and Beyond**
Trump mentioned curbing SpaceX’s federal contracts, threatening a company heavily reliant on government funds.
SpaceX commands clout with its capability of launching crews to the International Space Station using its Dragon capsules. The alternative partnership with Russia’s Soyuz remains politically delicate.
In a defiant response, Musk hinted SpaceX might retire its Dragon fleet, though later reassured, he wouldn’t pursue it.
**Starlink’s Trajectory**
Starlink, a SpaceX subsidiary, appears to have basked in Musk’s earlier camaraderie with Trump.
During a Middle East visit alongside Trump, Musk secured Saudi Arabia’s approval for Starlink services, echoing subsequent deals elsewhere as Trump postured tariffs.
On Friday, the Indian government confirmed granting Starlink a critical operating license, aiming to connect the nation’s billions cut off from the internet.
**Advertising Challenges for Social Media**
The platform X, under Musk’s stewardship, witnessed a slow advertiser return after housing conspiracy theories. Musk labeled their departure an “illegal boycott” while launching legal countermeasures and inviting a Federal Trade Commission probe into possible advertiser collusion.
However, advertisers might have new concerns if relations sour between Trump and X.
Cornell University’s political scientist Sarah Kreps noted, “A fallout with Trump could render X politically sensitive for major brands.” Although she cautioned, “Mass departure of advertisers isn’t imminent but will depend on the conflict’s trajectory and resolution.”