Musk vs Trump as Tesla Shares Tumble and SpaceX Threatens NASA

Friday 06 June 2025 - 08:31

By: Zahouani Ilham

Musk vs Trump as Tesla Shares Tumble and SpaceX Threatens NASA

Elon Musk, the CEO of Tesla and a close associate of U.S. President Donald Trump, has entered a heated dispute with the administration over its latest budget proposal. Musk’s outspoken criticism of Trump’s massive tax reform plan triggered a sharp fallout, leading to a dramatic drop in Tesla stock and a controversial threat to ground SpaceX’s Dragon spacecraft, which is vital to NASA’s operations.

NASA depends heavily on the Dragon capsule, which is currently the only American-made vehicle capable of transporting astronauts to the International Space Station (ISS). Removing it from service could severely disrupt a program maintained under an international partnership for over twenty years. Russia's Soyuz is the only alternative for crewed space missions to the ISS.

The dispute escalated after Trump suggested on Truth Social that cutting Musk’s government contracts and subsidies could save the country billions. In response, Musk retaliated by threatening to suspend Dragon’s use, a move that could unsettle international cooperation in space exploration.

Tesla shares reacted immediately, plunging nearly 15% and erasing around $150 billion from its market value. The incident underscored growing tensions between Musk and Trump, whose once-strong alliance has frayed over policy differences—especially around electric vehicle subsidies.

Trump remarked that Musk’s frustration stems from the budget bill's decision to end the federal EV mandate. “We had a great relationship. I don’t know if we will anymore,” Trump said, noting that Musk had been publicly supportive until recently.

Musk, who has been active in government cost-cutting efforts through the Department of Government Efficiency (DOGE), labeled the legislation a “disgusting abomination” on his social platform X. He argued it undermines the cost-saving work DOGE had achieved and urged lawmakers to reject it.

As the largest Republican donor in the 2024 election cycle, Musk’s public fallout with Trump has sparked criticism from both ends of the political spectrum. The backlash has affected Tesla’s performance in major markets, including Europe, China, and parts of the U.S., as Musk’s political affiliations alienate both Democratic and Republican consumers.

Tesla stock, once buoyed by Musk’s endorsement of Trump during the 2024 campaign, has suffered a steady decline since May, coinciding with Musk’s gradual disengagement from Washington politics.

Compounding the issue, the proposed budget bill in the House aims to phase out the $7,500 EV subsidy by the end of 2025—a policy shift that could cost Tesla up to $1.2 billion in annual profits and an additional $2 billion in regulatory credit losses. Critics warn that Musk’s conflict with the White House could jeopardize not only Tesla’s future but also SpaceX and Starlink, both of which rely on federal support.

While Musk joined Senate Republicans in criticizing the bill’s limited spending cuts, his aggressive stance has angered White House officials and confused investors. Tesla shareholder Dennis Dick commented that Musk’s shifting political loyalties continue to damage the brand’s image and stock performance.