America's prosperity hinges on Tesla and SpaceX, according to Trump, who supports Musk's ventures
In the world of business and politics, the relationship between Elon Musk and President Donald Trump has been nothing short of intriguing. As of mid-2025, Musk's companies, Tesla and SpaceX, have a complex relationship with government subsidies and contracts under the Trump administration.
Tesla, known for its electric vehicles, has been affected by the removal of the $7,500 electric vehicle tax credit under Trump's "One Big Beautiful Bill" legislation. This move, according to Tesla executives, has limited vehicle supply and hurt U.S. sales. The discontinuation of such tax credits and carbon offset mechanisms could also negatively impact Tesla's financial results and consumer demand, as stated in their financial filings.
On the other hand, SpaceX, with estimated government contracts worth around $22 billion as of 2024, continues to maintain substantial contracts with agencies such as NASA, the Department of Defense, and the National Reconnaissance Office. These contracts, awarded on merit due to SpaceX’s efficiency and lower costs, include launches to the International Space Station, satellite deployment, and broadband delivery.
However, the relationship between Musk and Trump’s administration has not been without tension. Musk has openly criticized Trump's budget policies, referring to them as a "disgusting abomination" on social media. This, along with disputes about subsidies and contracts, has marked a shift in their relationship.
Despite this, Trump has publicly stated his support for Musk’s companies, claiming he wants them to "THRIVE like never before." This sentiment was further demonstrated by the Pentagon's recent award of a $200 million contract to Musk's AI startup, xAI, as part of a broader push into defense-focused artificial intelligence.
However, the ongoing feud between Trump and Musk comes at a challenging time for Tesla. The company reported a 12% drop in revenue, a 16% decline in net income, and a 14% drop in deliveries for the second quarter. Musk acknowledged on the company's earnings call that Tesla could see "a few rough quarters" as subsidies phase out and tariffs increase.
The Trump administration has reportedly reviewed SpaceX's agreements to identify potential cuts, though most were deemed critical. The heavy reliance of SpaceX on U.S. government contracts could be affected by these potential cuts.
Despite their differences, Trump has stated he has no desire to "destroy" Elon Musk's companies. The complex relationship between Musk and Trump continues to evolve, with implications for both Tesla and SpaceX.
[1] The Verge
[2] CNBC
[3] Reuters
[4] The New York Times
- The technology sector, represented by Musk's companies Tesla and SpaceX, finds itself in the middle of politics, particularly under the Trump administration, as shown by the complex relationship between Musk and President Trump.
- Despite their disagreements, the Trump administration acknowledges the importance of technology in space-and-astronomy, demonstrated by the $200 million contract awarded to Musk's AI startup, xAI, for defense-focused artificial intelligence.
