Government contracts and market confidence hang in the balance
Elon Musk and President Donald Trump are back at odds, reigniting a high-stakes dispute that now threatens to drag Musk’s companies — especially Tesla and SpaceX — into political crossfire. The renewed tension follows Musk’s public criticism of Trump’s newly passed tax and spending bill, which adds $3.3 trillion to the federal deficit.
The feud has already shaken investor confidence. Tesla shares fell more than 4% Tuesday, continuing a volatile year that has seen the stock drop around 20% despite a recent spring rally. Musk acknowledged that the policies of his now-defunct Department of Government Efficiency may have sparked “some blowback” affecting Tesla’s consumer demand.
SpaceX’s government dependency under scrutiny
Tesla may grab headlines, but SpaceX’s $350 billion valuation is far more exposed to federal funding. The company has received upwards of $38 billion in U.S. government contracts, according to data from the Washington Post, with a record $6.3 billion awarded in 2024 alone. That includes major roles in the Artemis lunar mission and satellite launches for the Department of Defense.
Though SpaceX is privately held and insulated from stock market swings, its long-term success is directly tied to continued political goodwill. Musk’s fiery exchange with Trump last month — which included a threat by the president to cancel subsidies and contracts — triggered alarm in defense and aerospace circles.
Musk momentarily threatened to halt operations of the Dragon spacecraft, a key NASA transport vehicle, before reversing course. The public spat spooked stakeholders on both sides, with analysts noting that while SpaceX is essential to U.S. strategy in space, its dependence on federal dollars is undeniable.
Musk’s political ambitions and rising tensions
Complicating matters further, Musk has begun exploring the formation of his own political party focused on tackling national debt. While ineligible to run for office himself, the billionaire has suggested he may fund candidates aligned with his fiscal vision — a move that would intensify scrutiny around his business entanglements.
His support for a failed Wisconsin Supreme Court candidate earlier this year already prompted a reduction in political spending. Analysts believe the current flare-up with Trump may cool soon, given their mutual reliance: Trump needs Musk’s support for American innovation, and Musk needs access to federal contracts and infrastructure.
Markets and Musk’s net worth feel the heat
According to Bloomberg Government, Tesla and SpaceX have collectively secured $22.5 billion in federal unclassified contracts since 2000, the majority of which went to SpaceX. Musk’s personal net worth has taken a hit in recent weeks, slipping from nearly $500 billion post-election to $400 billion, though he remains the world’s richest individual.
As tensions rise, investors are weighing whether the clash between two of America’s most influential figures is a temporary scuffle — or the start of a deeper political and financial rift with implications for national space policy, military readiness, and electric vehicle innovation.