Two rules govern Donald Trump’s approach to life: everything is about money, and there must always be winners and losers. That truly is his “art of the deal”.
Now that his bromance with Elon Musk has soured, the US President is applying both of these beliefs with full force against his former friend, hitting him where he thinks it hurts most – in the pocket.
Tesla, the cash cow of Musk’s sprawling tech portfolio, has just suffered one of the worst weeks in its history. Shares in the electric vehicle business fell 8 per cent on Thursday alone. Overall, company stock value is down 37 per cent from its peak value last December, when Musk seemed inseparable from Trump, after spending nearly a quarter of a billion dollars getting him elected.
Not all Tesla’s troubles are directly attributable Trump. But the US President knows how to punch a bruise when he sees one.
The company’s model range is ageing and there is increased competition from cheaper electric vehicle (EV) manufacturers. In the US and around the world, sales are down at least 13 per cent year on year.
Trump tried to help turn this around back in March, when things were still good between them, by indulging Musk and turning the front of the White House into a sales forecourt for Tesla. Trump even bought a red car, but has since suggested he might sell it on. Meanwhile Tesla, which once accounted for four out of five EV sales in the US, now sells less than half of them.
But as Trump’s new laws come into force, it seems that he is reigning regulatory blows down on his old pal’s business. In an attempt to play down the consequences, even Musk admits Tesla is likely to suffer “a few rough quarters” during what he calls “a weird transition period where we’ll lose a lot of incentives” to buy his cars.
Trump bought a red Tesla after the two were seen sitting in one in the White House in March, but the President has since suggested he might sell it on (Photo: Mandel Ngan/AFP)Much of the bad news for Tesla can be traced to what the President calls his “Big Beautiful Bill”, which Musk has attacked as “an insane spending bill”, “massive, outrageous, pork filled” and a “disgusting abomination”. Musk is so angry he threatened to fund a new political party, The America Party, as a rival to the Republicans and Democrats, from the day the bill was passed.
In September the Trump administration is ending a $7,500 tax credit for buying EV vehicles, which dramatically subsidised sales.
Trump’s bill also brings down the curtain of “corporate average fuel economy” under which Tesla received billions of dollars from polluting car makers in return for “clean air credits”. At the start of the year these payments were all that kept Tesla in the black. The bill reduces fines for none compliance with this system to zero.
Trump and Musk were always on collision course over EVs. Trump has called climate change “a hoax” and has declared his policy is “drill, baby, drill” for oil and gas. Calling the President only by his initials, Musk complained on social media that “DJT has already removed or put an expiry date on all sustainable energy support while leaving massive oil and gas subsidies untouched”.
Other branches of Musk’s business empire are also being cold-shouldered by the administration. This week the White House press secretary, Karoline Leavitt, stated that the Trump administration does not support federal agencies entering into contracts with xAI, his artificial intelligence company.
Even the social media platforms on which they have exchanged hundreds of barbs are competitors. Musk owns X, formerly Twitter, while Trump’s Truth Social was set up in rivalry to it. Truth Social is not as big as X but it has still drained off revenue from the Maga faithful.
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Musk was ceremonially dismissed from the Oval Office in May. But in spite of the smiles and exchanged pleasantries, hostilities soon flared as Musk continued to question economic strategy.
While Musk complained about government spending, the President hit back with his favourite weapon: the implicit threat of economic harm. Trump toyed with turning Doge, the so-called Department of Government Efficiency, against Musk, who set it up. “The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,” he posted.
Tesla lost some $150bn in market value on the day Trump mused about reviewing federal contracts with Musk enterprises, including Nasa’s with SpaceX.
Musk responded by going personal. “Time to drop the really big bomb. Donald Trump is in the Epstein files,” he wrote on X, in a post which was subsequently deleted. “That’s the real reason they have not been made public. Have a nice day.” That tweet went viral and reignited the issue which continues to dog Trump to this day.
For now, both men think it is in their interests to calm things down, albeit grudgingly. “Everyone is stating that I will destroy Elon’s companies by taking away some, if not all, of the large-scale subsidies he receives from the U.S. government. This is not so!” Trump posted, claiming that he wanted all US businesses to “THRIVE”. To which Musk responded, “Phew”.
Musk’s business travails show that he needs Trump more than Trump needs him, just the sort of zero sum outcome the President has always favoured.
Don’t cry for Elon just yet though. According to the Bloomberg Billionaire Index, he is still comfortably the richest person in the world with a total net worth of $354bn, well ahead of Larry Ellison at No 2 on $293bn.
Even so Musk cannot afford another twelve months like the last. Most of the global billionaire top ten got richer, while Musk’s year of political meddling has cost him $78bn. “Loser!” as President Trump likes to say.
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