Trump threatens to cut off Elon Musk’s federal subsidies. That could cost Tesla and SpaceX billions.

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Trump threatens to cut off Elon Musk’s federal subsidies. That could cost Tesla and SpaceX billions.

President Trump on Thursday

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cutting off federal subsidies and contracts to Elon Musk’s companies, escalating a feud between the president and the world’s richest person. 

“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,” Mr. Trump wrote on Truth Social. 

Following through on the threat could cost Musk billions. His two largest companies, SpaceX and Tesla, both benefit from a wide array of government programs ranging from lunar launch contracts to electric car incentives.

Musk answered Mr. Trump with a threat of his own,

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SpaceX’s manned spacecraft program. Investors appear to be taking the squabble seriously: As the two men traded barbs Thursday, Tesla’s share price tanked 14%.

SpaceX

Musk’s rocket company has received tens of billions of dollars from the federal government over the last decade, including $3.8 billion in the 2024 fiscal year alone, according to

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.

The bulk of those federal grants are from the

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. NASA has

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to ferry astronauts and supplies to and from the International Space Station. The agency has also awarded SpaceX

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in recent years to design and build a lunar lander, as part of NASA’s Artemis program, which aims to

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to the moon for the first time in a half-century.

NASA’s partnership with Musk ramped up during the Obama administration, which

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SpaceX and Boeing to build spacecraft to transport astronauts — aiming to end NASA’s reliance on Russia following the end of the Space Shuttle program. In recent years, SpaceX has carried out several missions to and from the space station using its Dragon spacecraft.

Musk

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to Mr. Trump’s threat Wednesday to cut off contracts by saying SpaceX would “begin decommissioning its Dragon spacecraft immediately.”

A NASA spokesperson told CBS News the agency will “continue to work with our industry partners to ensure the President’s objectives in space are met.”

SpaceX has received grants from a handful of other federal agencies, including the Department of Defense, which has awarded the company

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for launch services.

Starlink — a division of SpaceX that offers satellite internet services — also has links to the federal government. As of earlier this year, the company was in line to take over a multi-billion dollar contract to upgrade the Federal Aviation Administration’s aging air traffic control communication systems.

Tesla

Musk’s electric car company gets

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than SpaceX — but it indirectly makes billions of dollars a year as a result of various state and federal programs.

The federal government has

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from Tesla here and there, though a plan for the State Department to buy some $400 million worth of armored vehicles was

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this year.

More importantly, Tesla

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last year by selling “

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” to other carmakers, helping rival companies reach the car emissions rules set by various governments. Tesla is in an unusually strong position to sell credits because, unlike most carmakers, it exclusively makes zero-emission electric vehicles — and those credit sales come at a “negligible” cost to the company, Tesla said in its 2024 annual report.

Many credits are sold to comply with state-level emissions rules, most notably in California, though congressional Republicans have sought to roll back some of the federal waivers that California needs to impose tougher emissions standards than the federal government.

If California’s regulatory credit program goes away, it could cost Tesla some $2 billion, JPMorgan Chase estimated in a report last month.

Tesla customers also benefit from a

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for electric vehicle purchases, a program designed to increase sales of electric cars — including Teslas. And the company’s solar power division gets a boost from federal renewable energy tax credits. Many of those incentives would end or face new restrictions under the One Big Beautiful Bill Act, a domestic policy bill containing Mr. Trump’s second-term agenda. It passed by the House last month and is now being considered by the Senate.

The end of those tax credits may cost Tesla $1.2 billion, according to JPMorgan Chase.

Musk has previously shrugged off the idea of winding down electric car tax incentives: “Take away the subsidies. It will only help Tesla,” he

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. Some

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an end to electric car credits would hurt Tesla’s rivals more than Tesla. Nonetheless, in a

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, Tesla pushed for a “sensible wind down” of some renewable energy tax credits, arguing an abrupt end would “would threaten America’s energy independence.”

Musk, for his part, called the One Big Beautiful Bill Act a “disgusting abomination” this week, helping ignite the feud with Mr. Trump. The billionaire’s public criticisms of the bill focus largely on the bill’s cost. But Mr. Trump

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Thursday that Musk “went CRAZY” after “I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted.”

Tesla’s early growth was also fueled by federal money. The company

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a $465 million Department of Energy loan meant to boost electric car production in 2010, and paid the government back several years later.

CBS News has reached out to Tesla and SpaceX for comment.

This isn’t the first time the president has needled Musk over his companies’ federal subsidies. In a 2022 feud, Mr. Trump

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Musk would be “worthless” without hefty subsidies for “electric cars that don’t drive long enough” and “rocketships to nowhere.” 

At that time, Musk

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Mr. Trump should not run for another term as president, saying he should “hang up his hat & sail into the sunset.”

The two ended up mending their relationship. Musk spent hundreds of millions to help elect Mr. Trump in 2024, and he led the cost-cutting Department of Government Efficiency in the Trump administration’s early months, forging a tight alliance with Mr. Trump — until this week.

Aimee Picchi

contributed to this report.

Joe Walsh

Joe Walsh is a senior editor for digital politics at CBS News. Joe previously covered breaking news for Forbes and local news in Boston.

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#Trump #threatens #cut #Elon #Musks #federal #subsidies #cost #Tesla #SpaceX #billions

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