US President Donald Trump on Tuesday threatened to cut off billions of dollars in subsidies that Elon Musk’s companies receive from the federal government, escalating a public feud between the president and the billionaire tech magnate.
The clash reignited on Monday when Musk, a one-time Trump ally who spent hundreds of millions supporting his re-election, sharply criticized the administration’s tax-cut and spending bill. The bill proposes to eliminate subsidies for electric vehicle (EV) purchases—benefits that have long supported Tesla, the leading US EV maker.
“He’s upset that he’s losing his EV mandate… he’s very upset about things, but he can lose a lot more than that,” Trump told reporters at the White House on Tuesday.
Musk’s companies, particularly Tesla and SpaceX, are heavily reliant on federal contracts, subsidies, and tax credits—support mechanisms that have brought in tens of billions in revenue over the years. Some of those, including consumer EV tax credits, are already at risk under Trump’s proposed legislation. Tesla shares fell over 6% on Tuesday following the latest exchange.
Musk, CEO of Tesla, responded by renewing his threat to form a new political party and fund primary challenges against lawmakers backing the bill—despite his earlier advocacy for limiting government spending. As of Tuesday, the bill remained in the midst of a drawn-out Senate amendment process.
It remains unclear how much influence Musk wields over Congress or whether his opposition will affect the bill’s passage. Nonetheless, some Republicans fear the Trump–Musk feud could damage their efforts to maintain control in the 2026 midterm elections.
Treasury Secretary Scott Bessent dismissed Musk’s warnings that the bill would balloon the federal deficit, responding, “I’ll take care of” the country’s finances.
Musk had previously led the Department of Government Efficiency (DOGE), an initiative to cut federal spending, but pulled back his involvement in May. On Tuesday, Trump suggested on Truth Social that Musk might have received “more subsidies than any human being in history, by far,” adding: “No more rocket launches, satellites, or electric car production, and our country would save a FORTUNE.”
Later, Trump told reporters with a smile, “DOGE is the monster that might have to go back and eat Elon.”
Musk responded on his social platform X, saying: “I am literally saying CUT IT ALL. Now.” He added that he could escalate the dispute with Trump but would “refrain for now.”
Challenges for Tesla
The feud comes at a challenging time for Musk’s business empire, particularly Tesla, which is betting heavily on its autonomous robotaxi program. The project, currently being tested in Austin, Texas, faces regulatory hurdles at both the state and federal levels.
The US Transportation Department will play a critical role in determining whether Tesla can deploy robotaxis without pedals or steering wheels. Meanwhile, SpaceX currently holds around $22 billion in federal contracts.
Tesla is also highly dependent on regulatory credits for EV sales. In fiscal year 2024, it reported $2.8 billion in such credits—revenue that could be slashed under the proposed tax bill.
Tesla is expected to report another weak quarter when it announces second-quarter delivery figures on Wednesday. Sales have continued to decline across major European markets, with some analysts citing Musk’s alignment with hard-right politics as a factor alienating buyers.
Trump had previously threatened in early June to sever Musk’s access to government contracts, following an online brawl over the spending bill. Analysts estimate the bill could add $3 trillion to the U.S. debt.
A subsequent market selloff wiped out $150 billion in Tesla’s market value amid fears that regulatory pushback could derail the company’s autonomous vehicle ambitions. Though Musk later toned down his criticism, the truce proved short-lived.
Over the weekend, Musk again lashed out at the bill, calling it “utterly insane and destructive.” He warned that lawmakers who voted for it would “lose their primary next year if it is the last thing I do on this Earth.”
Musk argues the legislation would erase much of the savings he claims to have delivered through DOGE.
“Musk cannot stop himself. He is getting on Trump’s bad side again,” said Dennis Dick, chief strategist at Stock Trader Network, who holds Tesla shares. “Tesla international sales have fallen significantly, and if he loses US subsidies, domestic sales are likely to fall as well. Musk needs Trump—Trump does not need Musk.”
Asked if he might deport Musk, a naturalized US citizen, Trump replied Tuesday as he left the White House: “I don’t know. We’ll have to take a look.”
