Trump escalates feud with Musk, threatens Tesla, SpaceX support

US President Donald Trump on Tuesday threatened to cut off the billions of dollars in subsidies that Elon Musk's companies receive from the federal government, in an escalation of the war of words between the president and the world's richest man, one-time allies who have since fallen out.

The feud reignited on Monday when Musk, who spent hundreds of millions on Trump's re-election, renewed his criticism of Trump's tax-cut and spending bill, which would eliminate subsidies for electric vehicle purchases that have benefited Tesla, the leading US EV maker.

That bill passed the Senate by a narrow margin midday Tuesday.

"He's upset that he's losing his EV mandate and … 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 businesses, especially Tesla and SpaceX, are highly dependent on an array of federal contracts, policies, subsidies and credits that have provided the companies tens of billions of dollars in revenue over the years.

Some of these benefits for Tesla, including consumer tax credits for EV purchases, were already on the chopping block in Trump's tax bill.

The Tesla CEO renewed threats to start a new political party and spend money to unseat lawmakers who support the tax bill, despite campaigning on limiting government spending.

Republicans have expressed concern that Musk's on-again, off-again feud with Trump could hurt their chances to protect their majority in the 2026 midterm congressional elections.

Treasury Secretary Scott Bessent pushed back on Musk's criticism that the bill would balloon the deficit, saying, "I'll take care of" the country's finances.

Musk spearheaded the Department of Government Efficiency (DOGE), aimed at cutting government spending, before he pulled back his involvement in late May.

Trump on Truth Social on Tuesday suggested Musk might receive 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."

Trump later doubled down, telling reporters with a smile, "DOGE is the monster that might have to go back and eat Elon."

In response to Trump's threats, Musk said on his own social media platform X, "I am literally saying CUT IT ALL. Now." He later added that he could escalate the exchange with Trump but said, "I will refrain for now."

The feud could create new challenges for Musk's business empire, particularly as the electric automaker — his primary source of wealth — bets heavily on the success of its robotaxi programme currently being tested in Austin, Texas.

The speed of Tesla's robotaxi expansion depends heavily on state and federal regulation of self-driving vehicles.

"The substance of Tesla's valuation right now is based on progress towards autonomy. I don't think anything is going to happen on that front, but that is the risk," said Gene Munster, managing partner at Tesla investor Deepwater Asset Management.

Analysts expect another rough quarter when the EV maker reports second-quarter delivery figures on Wednesday. Sales in major European markets were mixed, data showed Tuesday, as Musk's embrace of hard-right politics has alienated potential buyers in several markets worldwide.

Gary Black, a longtime Tesla investor who manages money for the Future Fund LLC, sold his shares recently as car sales declined. He told Reuters he is considering when to reinvest and that eliminating electric vehicle credits would harm Tesla. In a separate post on X, Black said: “Not sure why @elonmusk didn’t see this coming as a result of him speaking out against passage of President Trump’s big beautiful bill.”

The US Transportation Department regulates vehicle design and will play a key role in deciding if Tesla can mass-produce robotaxis without pedals and steering wheels, while Musk's rocket firm SpaceX has about $22 billion in federal contracts.

Tesla also gets regulatory credits for selling electric vehicles; the company reported $2.8 billion in those credits in the 2024 fiscal year.

Trump had in early June threatened to cut Musk's government contracts when their relationship erupted into an all-out social media brawl over the tax-cut bill, which non-partisan analysts estimate would add about $3 trillion to the US debt.

The subsequent selloff in Tesla shares erased $150 billion in market value, though the stock recovered after Musk walked back some of his comments.

The truce was short-lived, with Musk on Saturday calling the tax bill "utterly insane and destructive" in a post on X. He said lawmakers who voted for the bill after campaigning on cutting spending bill "will lose their primary next year if it is the last thing I do on this Earth."

Asked if he was going to deport Musk, a naturalized US citizen, Trump told reporters as he left the White House on Tuesday: "I don't know. We'll have to take a look."