From allies to enemies: The cost of a Musk-Trump split

Tesla and SPaceX CEO Elon Musk and US President Donald Trump shake hands as they attend the men's NCAA wrestling competition at the Wells Fargo Center in Philadelphia, Pennsylvania, on March 22, 2025. [AFP] The Tesla car company is the cornerstone of Musk's business empire and has suffered considerably since the entrepreneur dove into politics. The electric vehicle giant's stock has plummeted more than 20 per cent since the start of the year, reflecting investor anxiety about Musk's increasingly polarising public persona. The damage reached a fever pitch on Thursday when the Musk-Trump feud erupted out in the open. In a matter of hours, Tesla shed more than $150 billion (Sh19.3 billion) in market capitalisation, wiping $34 billion (Sh4.3 billion) from Musk's personal fortune. The alliance with Trump was supposed to have been Tesla's golden ticket, even if the administration was going to scrap tax credits that had helped it become an automobile juggernaut. More importantly, Musk could count on Trump's blessing for his ultimate vision: putting fully autonomous vehicles on American roads. This ambition has been stymied by government regulation over the years, with authorities slowing efforts due to worries that the technology is not ready to hit the road at mass scale. The Trump administration was expected to lift these regulatory constraints -- a promise now in serious jeopardy. "Musk needs Trump because of the regulatory environment, and you can't have Trump go from friend to foe," said analyst Dan Ives of Wedbush Securities. The administration also regulates vehicle design and would influence the mass production of robotaxis that Musk intends to launch in a pilot program in Austin, Texas, this month. Musk's hard-right political pivot has alienated the very customers Tesla needs most: environmentally conscious and liberal-leaning buyers who once saw the brand as aligned with their values. Some drivers have resorted to bumper stickers declaring their cars were purchased "before Elon went crazy." The damage is showing up in sales figures. In Europe, while overall electric vehicle sales climbed, Tesla's market share crashed 50 per cent in April as attention focused on Musk's political activities and the company's ageing product lineup. A recent Morgan Stanley survey said 85 per cent of investors believe Musk's political involvement is actively harming Tesla's business. A prolonged battle with Trump poses existential risks for SpaceX, Musk's space exploration company that has become NASA's most critical partner. SpaceX and NASA are deeply interdependent. SpaceX depends on government contracts worth tens of billions of dollars, while NASA relies on SpaceX for everything from astronaut transportation to satellite deployment. SpaceX's portfolio includes some of the most sensitive national security projects: launching astronauts to the International Space Station, building spy satellites and operating the Starlink satellite network. The financial windfall has been enormous, with a December share sale valuing SpaceX at $350 billion (Sh45.1 trillion) -- $140 billion (Sh18 trillion) more than just six months earlier, largely due to anticipated government largesse under Trump. In the heat of the clash on Thursday, Trump threatened to cut off all government contracts, while Musk said he would mothball the Dragon spacecraft, which is vital for ferrying astronauts to and from the International Space Station -- though he later walked back this threat. Musk has huge plans for his xAI artificial intelligence company. He's angling to compete with OpenAI, the ChatGPT-maker that was co-founded by Musk a decade ago and is now steered by his archrival Sam Altman.

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From allies to enemies: The cost of a Musk-Trump split

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