Tesla braces for weak Q2 results as political battle escalates
U.S. President Donald Trump escalated his feud with Elon Musk on Tuesday, threatening to cut off federal funding and subsidies to Tesla and SpaceX—companies that have long benefited from billions in government support.
The conflict flared up again after Musk, once a vocal supporter of Trump who contributed heavily to his re-election campaign, publicly criticized the administration’s tax and spending bill. The legislation, currently making its way through the Senate, proposes ending subsidies for electric vehicle (EV) purchases—benefits central to Tesla’s growth.
“He’s upset because he’s losing his EV mandate… but he could lose a lot more,” Trump told reporters at the White House. “No more rocket launches, satellites, or electric car production, and our country would save a FORTUNE.”
Musk’s companies depend heavily on federal support: Tesla through EV tax credits and environmental regulatory credits, and SpaceX via defense and NASA contracts—reportedly worth around $22 billion. As news of Trump’s remarks spread, Tesla shares dropped more than 6% on Tuesday.
Musk fired back on X (formerly Twitter), writing, “I am literally saying CUT IT ALL. Now.” He also hinted at escalating his opposition but added, “I’ll refrain for now.”
The tech mogul has also threatened to form a new political party and fund primary challengers against lawmakers supporting the bill. His rhetoric has rattled GOP insiders, who fear the feud could hurt their prospects in the 2026 midterm elections.
White House Press Secretary Karoline Leavitt downplayed Musk’s concerns, while Treasury Secretary Scott Bessent brushed off his warnings about fiscal irresponsibility, saying simply, “I’ll take care of” the national debt.
Musk previously chaired the Department of Government Efficiency (DOGE), a Trump-era initiative aimed at reducing federal spending. He withdrew from the role in May but now claims the current tax bill will erase the budgetary savings he helped achieve.
In a post on Truth Social, Trump mocked Musk’s prior role, writing, “DOGE is the monster that might have to go back and eat Elon.” He also suggested Musk may be “the most subsidized individual in history.”
Tesla Faces Headwinds
The political spat adds pressure to Tesla, which is already grappling with slowing sales, particularly in Europe. The company is preparing to report disappointing Q2 delivery figures on Wednesday, further weighed down by growing backlash against Musk’s polarizing political statements.
Tesla’s ambitious robotaxi project, currently being tested in Austin, Texas, is under scrutiny from both state regulators and the U.S. Department of Transportation. The company’s ability to proceed with a fleet of fully autonomous vehicles—without pedals or steering wheels—remains uncertain.
Tesla reported $2.8 billion in regulatory credit revenue in fiscal year 2024. That lifeline could vanish if Trump’s bill passes, jeopardizing the company’s financial outlook.
Musk’s earlier efforts to de-escalate the conflict proved temporary. Over the weekend, he once again slammed the bill as “utterly insane and destructive,” warning lawmakers they would “lose their primary next year if it’s the last thing I do on this Earth.”
Market jitters have already cost Tesla roughly $150 billion in valuation amid fears that political blowback could derail its future in both EV and autonomous tech sectors.
“Tesla’s international sales are slipping, and if U.S. subsidies disappear, domestic sales could collapse too,” said Dennis Dick, chief strategist at Stock Trader Network. “Musk needs Trump—Trump doesn’t need Musk.”
Asked by reporters whether Musk, a naturalized U.S. citizen, might face deportation, Trump smirked and replied, “I don’t know. We’ll have to take a look.”
