Background on Elon Musk and His Relevance
Elon Musk, the CEO of Tesla and SpaceX, was once a trusted ally of former U.S. President Donald Trump. Musk, known for his cost-cutting measures at Tesla, found himself in a public feud with Trump after criticizing the U.S. budget proposal, “One Big Beautiful Bill Act.”
The Public Dispute and Its Consequences
Trump’s relationship with Musk deteriorated rapidly, resulting in harsh words exchanged publicly. Trump accused Musk of becoming “unhinged” after the latter criticized the budget proposal, which Musk believed would negatively impact the nation’s debt.
This disagreement likely led to the termination of Tesla’s government subsidies for electric vehicle production and purchases, causing a significant drop in Tesla’s stock value.
Tesla Stock Plummets
On the day of Trump’s public criticism, Tesla’s stocks fell 14.26% to $284.70 per share, erasing $154 billion from Tesla’s market capitalization. The stock closed at its second-worst level since March 10, 2021.
This decline reflects investor concerns over potential financial pressure following the termination of government subsidies for Tesla.
Trump’s Threats and Musk’s Response
Trump threatened to terminate government contracts with Musk’s companies, escalating the public dispute. In response, Musk indicated his acceptance of a potential political trial via X (formerly Twitter) when asked if Trump should face one.
Trump’s grievances stemmed from Musk’s opposition to the proposed elimination of electric vehicle consumer tax credits, which Musk believed would increase federal deficits.
Musk’s Future Plans for SpaceX
Facing Trump’s threats, Musk announced plans to dismantle SpaceX’s Dragon spacecraft, the only U.S.-built vehicle capable of transporting astronauts to the International Space Station.
Despite this, Musk expressed acceptance of reduced electric vehicle tax credits, provided the Republicans eliminated what he called “disgusting fat” from the budget’s non-essential spending.
Key Questions and Answers
- What led to the rift between Trump and Musk? The disagreement began when Elon Musk criticized the U.S. budget proposal, “One Big Beautiful Bill Act,” believing it would negatively impact the nation’s debt.
- What subsidies did Tesla lose? Tesla likely lost government subsidies for electric vehicle production and purchases following the public dispute between Trump and Musk.
- How did the dispute affect Tesla’s stock? Tesla’s stocks fell 14.26% to $284.70 per share, erasing $154 billion from Tesla’s market capitalization.
- What are Musk’s plans for SpaceX? In response to Trump’s threats, Musk announced plans to dismantle SpaceX’s Dragon spacecraft but accepted reduced electric vehicle tax credits if the Republicans eliminated non-essential spending from the budget.
