Day: June 5, 2025

Thursday’s escalating explosions between President Donald Trump and Elon Musk are only a prelude. It is the start of a hot war, and it could soon get far worse for Musk while doing Trump little good‚other than to have a convenient scapegoat now for the unpopular DOGE with its over-promised $2 trillion of government savings.

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This breakdown is far worse than Trump’s usual fallouts following the exits of scores of other former loyalists. Musk is different. This is not about Musk taking a principled stand on the soaring debt or on any other political issue. Musk’s biggest mistake, it would seem, was that he forgot his role—as a staffer and advisor to Trump, not the primary character he believed himself to be. Trump, who relies on a model of leadership where all power is centralized in himself while dividing his subordinates against themselves, has always resented individuals who try to outmaneuver him. Trump will never have any tolerance for business leaders who challenge Trump’s authority.

Musk apparently believed that his wealth insulated him, but that was misguided. The reality is that Musk’s position is far weaker than many realize, and though he may be the world’s wealthiest person, his wealth is highly precarious. Virtually the entirety of Musk’s worth is paper wealth, coming from his roughly 12% ownership stake in Tesla, which has an exorbitant valuation, trading at over 100x price to earnings. Tesla stock lost 14% of its value today alone, and its excessive valuation, wildly detached from fundamentals, suggest we could still be in the earliest innings of an even greater loss.

Musk may think he has leverage over Trump, but the reality is he has little. Trump doesn’t need his money: he can easily replace Musk’s campaign contributions to his causes with other donors. There are many possible campaign contributors, but there is only one president. Similarly, Musk’s political brand has become a liability. Democrats don’t want him and he likely has no home in Trump’s Republican Party as some MAGA loyalists such as Steve Bannon are even calling for Musk’s deportation. Musk thinks he can blackmail Trump by withholding SpaceX’s Dragon spacecraft servicing of the International Space Station, but hurting U.S. interests for a personal vendetta will not go over well with anyone.

On the other hand, Trump has genuine and tremendous leverage over Musk. Musk’s businesses are highly dependent on the federal government directly, operationally and financially. Even setting aside the soon-to-be repealed government $7,500 subsidies for EV purchases and Trump’s influence over Tesla’s stock price, Tesla is hugely reliant on federal largesse for the build out of EV charging infrastructure, not to mention federal regulatory approval for his continued autonomous driving and robotics experiments.

So far, Tesla has evaded Department of Justice investigations and accountability for the deaths caused by the self-driving car, not to mention the concerns of waste, fraud, and abuse made possible by the EV tax credit and government subsidies. Similarly, SpaceX is hugely dependent on direct grants and regulatory permitting, clearances, and partnership from NASA and other federal agencies. As Musk headed out the White House door, Trump yanked the nomination of his friend Jared Isaacman as administrator of NASA days before Isaacman was poised for approval by the Senate. Musk’s company Neuralink is also dependent upon FDA approval and clearances for its human trials of its brain-computer interface device.

Musk says Trump would have lost without the funding and the campaign ground game Musk provided Trump’s campaign. As the partnership devolves from allies, to frenemies, to hostile adversaries, neither party will win, because neither party can apologize and walk away. Even if Musk and Trump succeed in finding some short-term off ramp, which is far from a given considering the tone Musk’s tweets have been taking thus far, it is hard to see how Trump would let this disloyalty slide.

Musk has defied naysayers and critics his entire life, soaring even higher while his critics are left behind in the dust, but one wonders whether we are now witnessing the implosion of the world’s wealthiest man in real time, with Musk having finally overplayed his hand.