US President Donald Trump has threatened to cut off the billions of dollars in subsidies that Elon Musk’s companies receive from the federal government, in an escalation of the war of words between the president and the world’s richest man, one-time allies who have since fallen out.
The feud reignited on Monday when Musk, who spent hundreds of millions on Trump’s re-election, renewed his criticism of Trump’s tax-cut and spending bill, which would eliminate subsidies for electric vehicle purchases that have benefited Tesla, the leading American EV maker. That bill passed the Senate by a narrow margin at midday on Tuesday.
“He’s upset that he’s losing his EV mandate and … he’s very upset about things but he can lose a lot more than that,” Trump told reporters at the White House on Tuesday.
Though Musk has often said government subsidies should be eliminated, Tesla has historically benefited from billions of dollars in tax credits and other policy benefits because of its business in clean transportation and renewable energy.
The Trump administration has control over many of those programs, some of which are targeted in the tax bill, including a $US7500 consumer tax credit that has made buying or leasing EVs more attractive for consumers. Tesla shares dropped more than five per cent on Tuesday.
The Tesla CEO renewed threats to start a new political party and spend money to unseat lawmakers who support the tax bill, despite campaigning on limiting government spending.
Republicans have expressed concern that Musk’s on-again, off-again feud with Trump could hurt their chances to protect their majority in the 2026 midterm congressional elections.
Treasury Secretary Scott Bessent pushed back on Musk’s criticism that the bill would balloon the deficit, saying, “I’ll take care of” the country’s finances.
Musk spearheaded the Department of Government Efficiency (DOGE), aimed at cutting government spending, before he pulled back his involvement in late May.
Trump on Truth Social on Tuesday suggested Musk might receive more subsidies “than any human being in history, by far,” adding: “No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE.”
Trump later doubled down, telling reporters with a smile, “DOGE is the monster that might have to go back and eat Elon.”
In response to Trump’s threats, Musk said on his own social media platform X, “I am literally saying CUT IT ALL. Now.” He later added that he could escalate the exchange with Trump but said, “I will refrain for now.”
The feud could create new challenges for Musk’s business empire, particularly as the electric automaker – his primary source of wealth – bets heavily on the success of its robotaxi program currently being tested in Austin, Texas. The speed of Tesla’s robotaxi expansion depends heavily on state and federal regulation of self-driving vehicles.
“The substance of Tesla’s valuation right now is based on progress towards autonomy. I don’t think anything is going to happen on that front, but that is the risk,” said Gene Munster, managing partner at Tesla investor Deepwater Asset Management.
Asked if he was going to deport Musk, a naturalised US citizen, Trump told reporters as he left the White House on Tuesday: “I don’t know. We’ll have to take a look.”