However, the history of Musk’s business empire tells a different story.
Musk’s companies have long been fueled by taxpayer money, whether in the form of massive government contracts, low-interest loans, tax incentives, and other supports that helped make him one of the world’s richest people.
Over the past two decades, companies run by Musk have received tens of billions of dollars in federal support.
A tally by The Washington Post revealed that at least $38 billion in government support has been funneled to Musk’s companies, an estimate that likely understates the scope of the support, as some defense and intelligence contracts are not publicly available.
In turn, the U.S. government has become dependent on Musk, from space travel to national security and the future of sustainable transportation.
Thus, when President Trump threatened on Thursday (5) to end Musk’s subsidies and government contracts amid a growing feud between the former political allies, the threat was met with some skepticism.
Musk has deep ties to the U.S. space program and intelligence community.
Musk’s companies have become inextricably linked to the federal government, particularly SpaceX’s crucial role in the American space program.
The company’s rockets now provide the only way for American astronauts to get to and from the International Space Station.
“While the political partnership seems to have come to an end, it’s hard to imagine the government canceling SpaceX’s contracts anytime soon,” said Dan Grazier, senior researcher and program director at the Stimson Center, a think tank focused on national security.
“It will take some time before any of the company’s competitors can make up for the lack of support, so it seems the president and the tech mogul will have to find a way to get along,” he said.
It’s unclear if Musk was joking or serious, but he responded to Trump’s threats by saying SpaceX would begin decommissioning its Dragon spacecraft, which has been used for years to transport crews and cargo to the space station.
In fact, there are astronauts on the station right now. They were taken there by a SpaceX capsule.
Cutting ties with the federal government would leave those crew members stranded and complicate the Trump administration’s goal of landing astronauts on the Moon in the coming years.
In the afternoon of Thursday (5), Musk appeared to backtrack, writing on X: “OK, we won’t decommission Dragon.”
SpaceX is also building hundreds of spy satellites for the Pentagon, Reuters reported in March, work that, if abandoned, could have national security implications and provoke backlash from the intelligence community.
Additionally, SpaceX’s Starlink satellite network is part of a multibillion-dollar federal effort to expand internet access to underserved parts of the country.
Ukraine has also heavily relied on Starlink services since Russia launched a full-scale invasion of the country in 2022, leading top Pentagon officials to coordinate directly with Musk, The New Yorker reported.
Federal support for Tesla and EV infrastructure in doubt
Tesla, the largest electric vehicle company in the U.S. (which also controls the country’s largest charging network), has been a major beneficiary of federal support.
That is likely to change with the massive congressional reconciliation bill championed by Trump.
The version of the bill passed by the House would cut consumer tax credits for electric vehicle purchases and slash federal funding for charging stations.
While auto industry experts consider these cuts more harmful to traditional automakers than to Tesla, Trump accused Musk of not supporting the bill because it eliminated electric vehicle subsidies.
Musk had previously opposed electric vehicle tax credits, viewing them as something that mainly benefits his competitors, but changed his mind as Tesla’s profits and sales plummeted globally since Musk began overseeing mass layoffs and other changes in the federal government through the cost-cutting unit, the Department of Government Efficiency.
The end of federal programs aimed at growing the electric vehicle sector would not hurt Tesla as severely as other problems the automaker faces, said John Helveston, a professor at George Washington University who studies the electric vehicle industry.
“Musk did Tesla no favors by taking extremely unpopular measures during his tenure at DOGE, and globally the company is facing challenges with other decisions, like focusing on the Cybertruck instead of launching more practical and new models that consumers actually want,” he said. “In the European Union, sales have plummeted due to political damage, and sales in China have fallen due to intense competition from very competitive Chinese electric vehicles.”
During the Biden administration, Congress allocated billions of dollars to expand electric vehicle charging stations nationwide. A key pillar of that plan was for Tesla to make its chargers compatible with other vehicles, something Tesla agreed to in exchange for a share of the federal funds. That plan was halted by the Trump administration, even before Congress tried to pass the Trump-backed tax policy bill, which would further reduce electric vehicle support.
Jeffrey Sonnenfeld, associate dean at Yale School of Management, said more troubles for Tesla could eventually sink Musk’s fortune.
“Tesla relies enormously on federal largesse for building electric vehicle charging infrastructure, not to mention federal regulatory approval for its ongoing experiments in autonomous driving and robotics,” Sonnenfeld said.
“His wealth is highly precarious,” he said, noting that most of Musk’s fortune is tied to his Tesla stake. “The reality is that Musk’s position is much weaker than many imagine.”
With or without subsidies, Musk “will continue to prosper”
The bitter implosion between Trump and Musk occurred just a few months after Trump turned the South Lawn garage entrance of the White House into a Tesla showroom, and after the White House hired Starlink to help expand internet across the White House campus.
Both were performative gestures that crystallized the billionaire’s close relationship with the president, who was willing to woo Musk after he shelled out more than a quarter of a billion dollars to support Trump’s presidential candidacy.
So, will the split between Trump and Musk have the opposite effect and cause damage to Musk’s companies?
Paul Levinson, a professor at Fordham University, said it might lead to more Tesla stock drops in the short term and an impact on his net worth. But even if some of the federal money flowing to Musk’s business empire disappears, it probably won’t hurt the billionaire in the long run, he said.
“Musk has ample resources to weather these losses, reorganize and rebuild his companies and holdings, and emerge victorious and triumphant,” Levinson said. “Bottom line: if all the Trump administration does in its feud with Musk is attack his financial interests, Musk will likely not only survive but continue to prosper.”
Source: www.npr.org by Bobby Allyn