President Donald Trump on Thursday dismissed claims that he intends to undermine Elon Musk’s businesses or their collaborations with the U.S. government. Posting on Truth Social, Trump wrote,
“Everyone is stating that I will destroy Elon’s companies by taking away some, if not all, of the large scale subsidies he receives from the U.S. Government. This is not so! I want Elon, and all businesses within our Country, to THRIVE, in fact, THRIVE like never before!”
He added, “The better they do, the better the USA does, and that’s good for all of us.”
Friction Between Trump and Musk Escalates
The tension between the two escalated following Musk’s opposition to Trump’s signature spending bill and intensified after Musk publicly criticized Trump’s association with convicted sex offender Jeffrey Epstein. In June, Trump threatened to cut some government contracts awarded to Musk’s companies during their ongoing dispute over the “One Big Beautiful Bill Act” (OBBBA).
Despite the conflict, Musk previously led the president’s Department of Government Efficiency and contributed hundreds of millions to Trump’s reelection campaign.
On a recent earnings call, Musk indicated that Tesla could face “a few rough quarters” due to tariff expenses and the pending expiration of federal electric vehicle incentives at the end of September. Meanwhile, White House Press Secretary Karoline Leavitt suggested the administration may prefer federal agencies avoid partnerships with Musk’s AI startup xAI.
The Pentagon announced contracts valued up to $200 million each for xAI and three other AI companies on July 14. Musk’s aerospace company, SpaceX, also holds significant government contracts, having received over $22 billion since 2008 from agencies including NASA, the Air Force, and Space Force. A recent Trump administration review found most of SpaceX’s contracts critical to government needs.
Tesla’s Regulatory Credit Revenue and Risks
Tesla’s financial filings indicate the company has earned $12.24 billion from automotive regulatory credits since 2015, including $439 million in Q2 2025 alone. These credits arise from federal and state mandates requiring automakers to produce low-emission vehicles or purchase credits from companies with surplus, such as Tesla. Sales of these credits directly boost Tesla’s profits.
In its recent quarterly filing, Tesla explicitly cited the Trump-backed OBBBA in the Risk Factors section, warning, “The loss of previously available tax credits and carbon offset mechanisms may further negatively impact our financial results.” The company further cautioned that OBBBA provisions could raise battery cell costs and reduce consumer demand.
Author’s Opinion
This unfolding conflict reveals how deeply intertwined politics and big tech have become, with government incentives and contracts wielded as tools for influence and leverage. While President Trump publicly denies intent to harm Musk’s enterprises, the repeated threats and contract reviews suggest an uneasy balancing act. For Musk, navigating the shifting political landscape while maintaining innovation and government relationships is a high-wire act with real financial stakes. The outcome will likely set important precedents for how tech giants engage with political power in the future.
Featured image credit: Heute
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