Will the Fight Between Trump and Musk Crash Tesla and the Future of AI?
Briefing: Tesla’s stock price went down after President Trump said the government should investigate how much money Elon Musk’s companies have received from the government and claimed that he gets more than anyone has ever received. Trump also warned that he may cut the government deals and contracts tied to Musk’s companies.
Details: Trump made these comments while criticizing a new spending bill that removes the electric vehicle mandate and said he might end government support for Elon Musk’s companies. He threatened to cancel the subsidies and contracts, which sparked concern on Wall Street. This also marked a big shift in their friendship, where Musk once supported Trump and worked with him on a cost-cutting program called DOGE. But things turned especially after Musk publicly criticized the spending bill, calling it full of “disgusting pork.” The fallout worried investors, causing Tesla to lose 14% of its stock in one day, which is about $150 billion in market value. Analysts say that the market reacted over fears of losing EV tax credits and possible delays to Tesla’s self-driving car ambitions.
Why It Matters: Tesla’s stock drop highlights how politics can influence the markets. If President Trump makes good on his threats, Tesla could lose major government support, like the $7,500 EV (Electric Vehicle) tax break and government contracts. That could hurt profits and slow progress in electric and self-driving vehicles. This fight might change how the government supports major tech and auto companies, especially in the race for clean energy and AI-powered transportation.
Research has shown that public funding from the government helps AI companies grow quicker, create more patents, and advance new technologies by encouraging more private investment. But when funding stops, like when Trump froze government tech grants in early 2025, it can delay AI projects and scare off private investors. In Tesla’s case, which relies on public funding for its work in self-driving vehicles and robotics, losing subsidies could slow down innovation, shake investor trust, and hurt the U.S.'s position in the global AI race.
Should the government continue funding Tesla? If so or if not, why? Reply, and let us know your thoughts.
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