NEW YORK, June 6 (Reuters Breakingviews) - Money can buy power, but Elon Musk paid for someone else to have it. After spending more than $250 million backing Donald Trump’s presidential campaign, an acrimonious schism erupted between the two and swiftly vaporized $150 billion of Tesla’s (TSLA.O)
, opens new tab market value. By picking a losing fight, the carmaker’s boss is putting even more at risk for himself and his investors.
A cozy alliance between the world’s richest man and its most powerful one pointed to a troubling oligarchy. Musk joined Team Trump to lead a controversial effort to slash costs from the U.S. bureaucracy. Tesla sales sank internationally, protests at showrooms escalated and concerns about the CEO’s focus intensified. He left his Department of Government Efficiency post last week, with an amicable White House sendoff.
The tone abruptly changed on Thursday. Musk’s criticism of Trump’s signature budget legislation and the president’s retorts about government contracts with Musk’s companies spiraled into a deeply personal social-media war of words.
Musk is a formidable force, with a net worth approaching $400 billion, according
, opens new tab to Forbes. His rocket company SpaceX accounted for 85% of orbit-bound cargo in early 2024 by one estimate. After paying $44 billion to buy Twitter, he remade it into a friendlier forum for the president’s followers. Any tinkering with the algorithms might swing the tone, as could Musk’s bulging wallet if used to support anti-Trump candidates.
, opens new tab from Trump to cut U.S. government purse strings from Musk’s businesses flaunts the real balance of power, however. About $22 billion of contracts hang in the balance at SpaceX alone, Reuters reported. Tesla’s deep ties in China, where it generated a fifth of revenue last year, also may tempt the president’s ire as he wages a highly combative trade war with Beijing. Reprisals from President Xi Jinping also could be painful.
Musk is doing his companies no favors either. He pivoted Tesla away from mass-market dominance to pursue autonomous driving instead. National regulators have nagging questions about robotic taxi services. A more hostile regulatory environment would undermine the moonshot, leaving a shrinking car business falling behind Chinese rivals.
If Musk doesn’t back down, as he hinted was a possibility, the costs are bound to escalate. Having already alienated pro-renewable-energy Democrats, he may scare off pro-Trump Republicans, too. An adversarial relationship with SpaceX is probably untenable for NASA. Raising money for his artificial intelligence venture may get harder, as would securing U.S. government contracts for his tunneling company. Musk achieved success by defying perceived scientific constraints, but he is now pushing up against the limits of money.
00:06AI’s $320 bln arms race
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Reuters