U.S. President Donald Trump issued a stark warning on Tuesday, threatening to revoke the vast subsidies that Elon Musk’s companies receive from the federal government. This latest escalation marks a significant deterioration in the relationship between Trump and Musk, once considered allies but now embroiled in a public feud. The tension flared up on Monday when Musk, who invested hundreds of millions in Trump’s re-election campaign, reignited his criticism of a tax-cut and spending bill. This legislation aims to eliminate subsidies for electric vehicle purchases that have historically benefitted Tesla, the leading electric vehicle manufacturer in the United States. On Tuesday, the Senate narrowly passed the contentious bill, further intensifying the stakes for both parties.
During a press briefing at the White House, Trump remarked, “He’s upset that he’s losing his EV mandate and … he’s very upset about things but he can lose a lot more than that,” referring to Musk’s growing dissatisfaction with the proposed legislation. The backdrop of this feud highlights the complex dynamics of government support in the burgeoning electric vehicle sector. While Musk has frequently advocated for the elimination of government subsidies, Tesla has nonetheless reaped significant financial rewards from federal tax credits and other incentives tailored to promote clean transportation and renewable energy initiatives. The Trump administration maintains oversight over many of these programs, some of which are directly impacted by the tax bill currently making its way through Congress. Notably, the proposed legislation seeks to abolish the $7,500 consumer tax credit, an incentive that has made purchasing or leasing electric vehicles more appealing to American consumers.
The immediate fallout from this exchange was evident as Tesla’s stock price plummeted by over 5% on Tuesday, reflecting investor concern over the potential repercussions of the bill and the ongoing feud with Trump. In response to the mounting tensions, Musk has hinted at the possibility of launching a new political party, expressing intentions to financially back candidates who oppose the tax bill. This move comes despite his previous campaign platform centered around the notion of reducing government spending. The implications of Musk’s actions are not lost on Republican lawmakers, who worry that his erratic relationship with Trump could jeopardize their chances of maintaining a majority in the upcoming 2026 midterm congressional elections.
Amidst the swirling controversy, Treasury Secretary Scott Bessent countered Musk’s claims that the tax bill would exacerbate the national deficit, asserting, “I’ll take care of” the country’s finances. This response underscores the administration’s commitment to fiscal responsibility, even as it navigates the complexities of its relationship with influential figures like Musk.
Musk had previously taken the lead in establishing the Department of Government Efficiency (DOGE), an initiative designed to streamline government spending. However, he withdrew from active participation in late May, raising questions about his commitment to this endeavor. Trump, leveraging this backdrop, took to Truth Social on Tuesday to suggest that Musk might be receiving more subsidies “than any human being in history, by far,” warning, “No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE.” This comment highlights the contentious nature of their dispute, as both figures leverage their platforms to influence public opinion and the legislative process.
In a follow-up interaction with reporters, Trump reiterated his stance with a hint of amusement, stating, “DOGE is the monster that might have to go back and eat Elon.” This remark encapsulates the surreal nature of the feud, blending political rivalry with a touch of humor that characterizes much of Trump’s public persona. As the battle of words continues, the implications for both the automotive industry and the political landscape remain to be seen. The ongoing developments highlight the intricate interplay between business interests and governmental policy, particularly in the rapidly evolving electric vehicle market, where both innovation and regulation will play critical roles in shaping the future. As stakeholders on both sides brace for the fallout, the coming weeks will undoubtedly shed light on how this high-profile clash will impact not only Musk’s enterprises but also the broader political narrative leading into the midterm elections.