During a Tuesday confrontation President Donald Trump threatened to withdraw federal funding worth billions from Tesla and SpaceX because of his disagreement with Elon Musk over his $3.3 trillion tax-and-spending bill.
The dispute started after Musk expressed his disapproval of the bill’s elimination of electric vehicle purchase subsidies which form the foundation of Tesla’s operations. Trump warned Musk that his companies might face greater losses than the elimination of EV incentives as he suggested a comprehensive review of all contracts and grants.
The market reacted negatively to Trump’s comments by causing Tesla stock prices to drop 5% while the company’s year-to-date performance showed a 20% decline because of declining EV sales and investor doubts about Musk’s political involvement.
Musk has considered establishing a new political party while vowing to defeat politicians who support the bill despite his previous support for limited government spending. The Senate continues to debate amendments for the bill while Trump remains stuck in a legislative impasse.
Treasury Secretary Scott Bessent rejected Musk’s deficit concerns by supporting the fiscal package. The open feud between these two figures has led analysts to predict significant increases in regulatory and financial risks for Musk’s companies throughout the next several months.
