Elon Is Asking For It: What Musk's Latest Trump Spat Means As Tesla Sales Sink

Forbes

2 days ago

Elon Musk Speaks During A town Hall Event In Green Bay, Wisconsin The Washington Post via Getty Images
Elon Musk's tantrum over President Donald Trump's budget bill that adds trillions of dollars to the federal deficit raises the possibility that the intemperate billionaire is once again courting new risks for his companies, especially Tesla. The spat comes as the carmaker is expected to post a big drop in electric vehicle sales tomorrow. Meanwhile, it's about to lose federal incentives for EV sales and charging services, and its proposed robotaxi business may hinge on whatever federal regulations the Trump administration cooks up.
It's a 'soap opera that remains an overhang on Tesla's stock with investors fearing that the Trump Administration will be more hawkish and show scrutiny around Musk-related U.S. government spending [for] Tesla/SpaceX and most importantly the autonomous future with the regulatory environment key to the future of Robotaxis and Cybercabs,' Dan Ives, an equity analyst for Wedbush said in a research note.
Musk's companies have sucked in at least $30 billion of public support since 2010
Given how reliant Tesla and SpaceX have been on federal support for the past 15 years, he has much to lose. Forbes estimates Musk's companies have sucked in at least $30 billion of public support since 2010, including lucrative rocket launch and satellite contracts for SpaceX, a low-cost federal loan for Tesla's first factory and billions of dollars of free money it generates selling federal and California pollution credits. The U.S. is highly reliant on SpaceX, so it's less likely to suffer in the near term. Tesla, however, will undoubtedly be hurt by the elimination of $7,500 tax credits for EV buyers, now likely to phase out in September, and the end of government support for a national EV charging network it's benefited from. The company could also suffer if the U.S. Transportation Department were to craft stricter national safety requirements for autonomous vehicles and robotaxis, which Musk has been touting as a major new revenue source for Tesla.
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After a decade of steady global growth, Tesla's sales have stalled over the past year, dropping 13% in the first quarter. Consensus estimates expect Austin-based Tesla will report deliveries tomorrow of about 380,000 electric cars and crossovers in the three months that ended June 30, down 14% from a year ago. And that may be optimistic. Analysts like Deutsche Bank's Edison Yu see a far sharper decline, down as much as 20% to about 355,000 units, with sales plunging most sharply in Europe, down in North America and even in China, Tesla's biggest profit center.
'We expect Tesla's 2Q25 deliveries to miss sell-side consensus expectations, but this shouldn't come as a surprise as buy-side expectations are already materially lower at the moment,' Yu said in a research note. For the full year, he now expects the company to sell about 1.6 million vehicles, down nearly 10% from 2024.
Tesla's slide over the past year coincided with what was until recently Musk's outspoken and financially generous support for Trump. But after stepping down in May from his role leading the DOGE initiative, much-criticized for haphazardly slashing thousands of federal jobs, Musk clashed with Trump over the so-called 'One Big Beautiful Budget Bill' in early June, complaining about how much it increased federal spending. Six days later, he reversed course and tried to smooth things over with the U.S. president even deleting a post linking Trump to the Jeffrey Epstein scandal. But he broke his relative silence last week after the release of a draft version of the Senate bill which would increase the deficit by $3.2 trillion, even more than a version that passed the House by a single vote.
'It is obvious with the insane spending of this bill, which increases the debt ceiling by a record FIVE TRILLION DOLLARS that we live in a one-party country – the PORKY PIG PARTY!!' he wrote on X on Monday.
While Musk's criticism has focused on government spending, he's also complained that 'Trump's bill will eliminate millions of jobs in America and cause huge strategic damage to our country.' The plan 'gives concessions to old industries but will destroy future industries.'
In response to his complaints and claims he'll spend heavily to defeat members of Congress who voted for the legislation, Trump said he might have to 'put DOGE on Elon...DOGE is the monster that might have to go back and eat Elon. I don't think he should be playing that game with me.'
Trump suggested he would 'take a look' at potentially deporting the world's wealthiest person, a native South African who's a naturalized U.S. citizen. That's probably unlikely, but Trump can inflict significant pain on his former patron by turning up the heat on investigations into Tesla. For example, he could push the National Highway Traffic Safety Administration to intensify its long-running probe of Tesla's Autopilot and Full Self-Driving features that are linked to multiple fatal accidents. Or he could pressure the Securities and Exchange Commission to review the veracity of some of Musk's public Tesla comments, and even scrutinize the company's heavy reliance on manufacturing in China.
"He's upset that he's losing his EV mandate. He's very upset,' Trump told reporters on Tuesday. 'He could lose a lot more than that, I can tell you that.'
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