Trump-Musk Feud Reignites: Billions in SpaceX and Tesla Government Contracts Under Threat

The high-stakes feud between Elon Musk and former President Donald Trump has reignited, placing Musk’s vast business interests, particularly the lucrative government contracts enjoyed by SpaceX and Tesla, squarely in the crosshairs. The renewed public dispute comes as investors reacted sharply, with Tesla shares falling over 4% in Tuesday’s afternoon trading.

While Tesla’s stock has seen a late-spring rally, it remains down approximately 20% year-to-date. The company’s valuation has been impacted by a global backlash over Musk’s past alignment with Trump. Despite some acknowledged ‘blowback’ from Musk’s Department of Government Efficiency project, investors largely remain bullish on Tesla’s pivot towards self-driving taxis and robotics, pushing its market valuation back towards $1 trillion.

However, the more direct financial implications of this renewed spat are for SpaceX. Valued at $350 billion, SpaceX is heavily reliant on government contracts, with substantial work for NASA’s Artemis mission and serving as the sole active vessel for astronaut transport to and from the International Space Station. SpaceX also dominates satellite launches for the Department of Defense, responsible for the majority of such missions today.

As a privately held company, SpaceX’s real-time market reaction is difficult to gauge, but the potential impact is substantial. Combined federal unclassified contract revenue for SpaceX and Tesla since fiscal year 2000 stands at $22.5 billion, with the majority going to SpaceX. The Washington Post reports SpaceX alone has received nearly $38 billion, with a record $6.3 billion in 2024 alone.

The ongoing dispute has also chipped away at Musk’s personal net worth, which has declined from nearly half a trillion dollars post-Trump’s election win to a current $400 billion. The tiff initially surfaced last month after Musk stepped down from a government role and criticized a massive spending and tax cut bill, prompting Trump to threaten terminating Musk’s ‘Governmental Subsidies and Contracts.’ While Musk briefly threatened to ‘decommission’ the Dragon spacecraft before reversing course, the current escalation sees him reportedly discussing launching his own political party to address U.S. fiscal imbalances, a move that could raise immediate conflict-of-interest questions for any candidate he backs.

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