How Musk’s ‘soap opera’ with Trump could dent his businesses — and upend federal policy

Elon Musk’s rift with President Donald Trump is exposing his companies to all the perilous downsides of going to war with his former First Buddy.

From SpaceX’s role as a defense and space contractor to Starlink’s hopes for billions in federal broadband subsidies and air traffic control contracts, Musk’s businesses stood to reap potentially limitless gains from his 130 days as Trump’s cost-cutter-in-chief. Even after the world’s richest man left the White House a week ago, acolytes from his Department of Government Efficiency remained in key positions at agencies that make decisions about his companies — including weighing how to handle safety problems at Tesla, alleged security violations involving X, Musk’s potential ventures in cryptocurrency, or air pollution generated by his artificial intelligence agent Grok.

Now those same arms of government — the vast, powerful federal bureaucracy that Trump has openly portrayed as a weapon to be wielded against his enemies — are potential threats to Musk’s business empire.

Already, fallout from the Musk-Trump feud has wiped billions of dollars off Tesla’s stock, although it recovered somewhat Friday after the White House sent signals of a possible rapprochement. The drama could reshape myriad policy outcomes, including the futures of brain-chip technology or America’s hopes of reaching Mars.

“This is quite the soap opera,” said Steve Sosnick, a Wall Street veteran who works as chief strategist for Interactive Brokers. “A lot of people saw this as a potentially combustible relationship, but the speed and ferocity at which it combusted is really astounding.”

Here are some of the potential implications for Musk’s businesses as a once-mighty alliance between the two men at the peaks of wealth and political power devolves into an ugly divorce:

A rougher ride for Tesla

Tesla is arguably the cornerstone of Musk’s business interests, the company that helped electric cars go mainstream in the U.S. and has visions of dominating the future of self-driving taxis. But much of its fate is in the hands of regulators at the Transportation, Treasury and Commerce departments.

Before Trump’s second term started, DOT’s National Highway Traffic Safety Administration had opened probes targeting significant concerns with Tesla’s design, mostly involving its suite of auto-throttle and lane-keeping technologies that the company erroneously names “Autopilot” or “Full Self Driving.” The agency investigates safety issues with automakers and can issue recalls for cars that suffer defects — and while Tesla had been poised for a potentially easier ride with Musk in Trump’s good graces, that dynamic could now flip.

Musk is also keenly interested in autonomous vehicle technology and has a significant stake in seeing it more widely adopted. Early moves by DOT had appeared aligned with Musk’s interests, including requiring less self-reporting for some crashes involving driverless cars.

He also wants national standards for autonomous vehicles, rather than the state-by-state patchwork that exists now — a wish that Transportation Secretary Sean Duffy has supported. But Congress has failed in the past to enact legislation to create a national standard, and Musk’s barrage of attacks on GOP congressional leaders could make that already heavy legislative lift even harder to reach.

Tesla also benefits from a suite of federal clean energy policies left over from the Biden era, including a $7,500 tax break for electric vehicle purchases, that Republicans are now pushing to abolish in the “big beautiful bill” that triggered the flameout between Musk and Trump. (Musk has denied that his attacks on the bill are an attempt to salvage the tax credits — saying his complaint is the trillions of dollars that the bill would add to the national debt.) Tesla faces an additional threat from a Commerce Department proposal earlier this year to impose tariffs of up to 721 percent on battery ingredients from China.

The GOP megabill also threatens to deliver a quick death to tax incentives that are crucial for Tesla’s solar energy generation and storage division, whose annual revenues recently jumped 67 percent year-over-year to $10 billion. Tesla Energy has instead urged the Senate to support a “sensible wind down” of those tax credits, arguing that ending them abruptly “would threaten America’s energy independence and the reliability of our grid.”

— Chris Marquette and Kelsey Tamborrino

SpaceX lost in space?

Trump’s most direct threat to punish Musk came in a Truth Social post Thursday, in which he mused about cutting billions of dollars in the megabillionaire’s companies’ U.S. government contracts.

Calling it “the easiest way to save money in our Budget,” Trump added that he “was always surprised that Biden didn’t do it!”

That threat could cut both ways.

SpaceX alone has received at least $20.9 billion in government contracts over the past 18 years, largely from NASA and the Defense Department, according to public federal spending records. The majority of that funding was awarded within the last five years.

But the government depends on Musk’s companies as well, with the Pentagon relying on his rocket company, SpaceX, for rapid and low-cost launches. It is unlikely that its biggest competitors, including the joint Boeing and Lockheed Martin-backed venture ULA or the Jeff Bezos-led BlueOrigin, could make up the difference.

NASA relies on SpaceX as the only American company able to ferry astronauts to and from the International Space Station, at least until Boeing works out problems with its Starliner. Musk, aware of that fact, greeted Trump’s announcement with a counterpunch — tweeting that SpaceX would begin decommissioning its Dragon spacecraft “immediately.” Musk later walked back that comment upon the advice of an account on X named “Alaska.”

If SpaceX did decommission Dragon, the U.S. would have to go back to hitching rides aboard Russian spacecraft — a potentially awkward arrangement as Trump pushes Russian President Vladimir Putin to resolve his war in Ukraine. The move would also imperil plans to launch commercial space stations under a NASA-funded program.

In addition, SpaceX is key to NASA plans to return to the moon, with the company slated to provide a landing system for astronauts for a planned 2027 mission. SpaceX was also seen as a top contender to win contracts for Trump’s proposed “Golden Dome” defense system, which would rely on a constellation of satellites to track missile threats against the U.S. homeland.

Musk’s SpaceX has already landed federal contracts for seven upcoming space launches worth $845.8 million out of nine that the U.S. is set to conduct. Payload, a media outlet covering the space industry, estimated that SpaceX’s revenue shot up by more than 50 percent to over $13 billion in 2024, with U.S. government launches and Starlink purchases helping to drive the increase.

DOT could also create significant headaches for SpaceX, whose launches are licensed by the Federal Aviation Administration. SpaceX can’t launch without an FAA permit, and under the Biden administration several of its launches were delayed or prohibited until the company fixed problems or passed environmental reviews.

The FAA also slapped SpaceX with a $633,009 fine last year for separate launch violations, triggering Musk to call for its then-administrator Mike Whitaker to resign. Whitaker subsequently stepped down, effective the day Trump took office — years ahead of the end of his five-year term.

— Jack Detsch, Joe Gould, Sam Skove, Oriana Pawlyk and Jessie Blaeser

Starlink’s quest for billions

Starlink, SpaceX’s satellite subsidiary, has been angling for a role in the FAA’s promise to upgrade its beleaguered air traffic control system — one of the most criticized potential conflicts of interest between Musk’s businesses and his former leading role in the Trump administration. And it’s seeking billions of dollars in Biden-era broadband subsidies, a decision in the hands of the Commerce Department.

Now all that is at risk.

Musk has publicly promoted Starlink’s satellite communications terminals as a solution for the FAA’s communications technology problems, while criticizing Verizon’s work on a $2.4 billion contract meant to upgrade the agency’s telecom infrastructure from copper wires to fiber optics. (He later conceded that he had meant to criticize a different contractor.)

Duffy more recently urged Congress to approve a massive improvement plan for the FAA that could, among other fixes, allow either fiber or satellite technology to replace the agency’s telecommunications equipment. He said he was “agnostic” about whether Musk’s companies should be involved.

Duffy also allowed SpaceX employees to visit an FAA air traffic control center in Virginia in February, and some SpaceX engineers took temporary jobs at the agency under an ethics arrangement that allowed them to take part in matters that could affect the company’s financial interests.

To date, however, the FAA has not disclosed any information about whether it intends to modify the Verizon contract or award any business to Starlink, beyond a handful of test sites that have been in progress since before Trump took office.

At the same time, Starlink could reap enormous taxpayer subsidies from the federal buildout of fast internet access across the country as the Commerce Department overhauls its funding rules to allow a larger role for satellite companies. The changes in the $42.45 billion Broadband Equity, Access, and Deployment program were expected to hand a bigger role — and much more money — to new technologies like satellite broadband. Musk’s Starlink would likely be the big winner from that overhaul.

Musk was also looking to Trump-appointed officials in Commerce and the Federal Communications Commission to make smaller rule changes that could have helped expand Starlink’s business, such as freeing up wireless bandwidth for satellite service providers.

— Oriana Pawlyk and John Hendel

Tightened scrutiny for X

The Federal Trade Commission is in charge of enforcing a consent decree stemming from a 2011 settlement with Musk’s social media company — then called Twitter and under different ownership — over data security violations. The order was updated in 2022 when the company had to pay a $150 million fine for violating the original deal, and it’s set to keep X under FTC scrutiny until 2042.

The order requires periodic audits of X’s privacy and security practices, and violations could result in extending the consent decree order, as well as additional fines. It’s been a thorn in Musk’s side since he acquired the company.

The FTC is also investigating whether advertising groups violated antitrust laws through coordinating boycotts against X — an investigation that could help Musk, if it turns up illegal collusion. Or regulators could drop or stall the probe amid the Musk-Trump feud.

Meanwhile, the clash between Musk and Trump blew up just as the Securities and Exchange Commission on Thursday was granting Musk, a longtime critic of the agency, another six weeks to respond to a January lawsuit over his purchases of Twitter stock in 2022. The agency has alleged that Musk was 11 days late to publicly disclose he had acquired a major stake in the company — a gap that allowed him to buy up shares cheaply while investors lost out on more than $150 million.

How Trump’s SEC handles the case has already been a question mark to many former Wall Street regulators.

— Alfred Ng and Declan Harty

Neuralink needs an assist from the FDA

Musk’s brain-implant company Neuralink has won some key federal approvals allowing it to test its technology, but it will ultimately need Food and Drug Administration clearance for its chip to reach the market.

Neuralink said in May that the company had received a breakthrough designation from the FDA for its device, which aims to restore the ability to communicate in people with severe speech impediments caused by a variety of neurological conditions or paralysis. The designation gives the company quicker access to agency feedback while trying to expedite the review process.

While FDA commissioners have historically shied away from interfering in product reviews, the agency head could call for conditions to be placed on any Neuralink clearance, such as postmarketing study requirements. Commissioner Marty Makary recently unveiled a framework for approving updated Covid vaccines that sets study expectations for manufacturers who want to get their shots approved for young, healthy people.

The agency green-lit the company’s first clinical trial in humans in 2023.

— Lauren Gardner

Musk’s crypto hopes

The Trump-Musk breakup comes as Congress is considering legislation that would regulate cryptocurrencies.

Musk — a longtime fan of the industry and particularly the token Dogecoin — isn’t explicitly in the crypto business. But his social media company’s plan to launch an “X money” platform with Visa has sparked concerns among some lawmakers that he or another big technology firm could seek to issue a digital currency known as a stablecoin that is pegged to the value of the dollar.

Lawmakers could include language in crypto legislation that would limit tech firms’ ability to use stablecoins to get into financial services. That would allay fears from Democrats about digital currencies breaking down historic barriers between banking and commerce firms — but it would deliver a blow to Musk.

What’s more, X’s payments company is poised to operate as a money transmitter business that is regulated by the Treasury Department. The company has already obtained licenses in several dozen states and has registered with Treasury’s Financial Crimes Enforcement Network.

— Jasper Goodman and Michael Stratford

Cracking down on smog in Memphis

Trump’s environmental regulators also have the power to obstruct one of Musk’s highest-profile initiatives — his artificial intelligence company, xAI.

The Memphis, Tennessee-based supercomputer behind Musk’s chatbot, Grok, has a voracious appetite for electricity, and has been powered in part by natural gas turbines operating without Clean Air Act permits since June 2024.

The Environmental Protection Agency has so far declined to take any action against the sprawling supercomputer facility for the huge amounts of smog-forming air pollution it’s releasing. Theoretically, though, it could order xAI to shut the unpermitted turbines down.

If that happens, Grok would be forced to operate on just 150 megawatts of power that xAI receives from the local electric grid — a fraction of what it needs.

Musk has underscored the importance of the turbines to his operations, saying at the launch of Grok3 in February that the bot was powered by “trailer after trailer of generators.” xAI was valued at $80 billion in March when it bought Musk’s social media site X.

xAI is now seeking a Clean Air Act permit for 15 of the turbines. The decision technically lies with the Shelby County Health Department, but the department has requested assistance from EPA, which is reviewing the issue. EPA Administrator Lee Zeldin met with xAI representatives at the end of May.

— Ariel Wittenberg