Elon Musk Breaks with Trump Administration: Implications for Tesla and SpaceX
Elon Musk’s departure from his role in the Trump administration marks a pivotal moment for his companies, Tesla and SpaceX, as both face significant challenges and opportunities. Musk, who led the controversial "Department of Government Efficiency" (DOGE), aimed at cutting federal spending, exits amid slumping Tesla sales and SpaceX’s recent rocket setbacks. Here’s what this shift means for his empire: 1. Tesla’s Struggles and the Road Ahead Sales Slump and Brand Damage: Tesla’s sales dropped 13% in Q1 2025, its worst performance in nearly three years, with European sales plunging 50% in April. Analysts attribute this to Musk’s polarizing political ties and aging product lineup 137. Robotaxi Gamble: Musk is pivoting to autonomous vehicles, announcing a June launch for Tesla’s robotaxis in Austin, Texas. Success hinges on overcoming technical hurdles and competition from Waymo 35. Market Sentiment: While Musk’s exit may ease backlash, analysts like Morningstar’s Seth Goldstein argue Tesla needs deeper fixes to counter saturation and rising competition in the U.S., China, and Europe 25. 2. SpaceX’s Mixed Fortunes Starship Setbacks: A recent Starship explosion over the Indian Ocean delayed testing goals, though SpaceX retains dominance in commercial launches. NASA still plans to use Starship for lunar missions 15. Starlink’s Political Edge: Regulatory approvals for Starlink in countries like Saudi Arabia and Bangladesh were likely smoothed by Musk’s Trump ties. His exit raises questions about future deals 37. 3. Political Fallout and Regulatory Risks Musk’s close ties to Trump drew scrutiny, including accusations of favoritism for SpaceX/Tesla contracts. His criticism of GOP tax bills (which could cut EV credits) further complicates relations 67. While Trump claims Musk will remain informally involved, regulatory advantages for Musk’s companies may diminish 45. 4. Reputation and Investor Sentiment Polls show Musk’s favorability at record lows (35–44%), with Tesla and SpaceX’s brand rankings dropping. Protests and boycotts have targeted Tesla over Musk’s political stances 7. Investors hope Musk’s refocus on operations will stabilize Tesla’s stock, down 25% since December 25. Bottom Line: Musk’s exit from politics may help repair Tesla’s image, but operational challenges remain. SpaceX’s trajectory depends on overcoming technical hurdles and maintaining its lead in a politicized landscape. The robotaxi launch and Starship’s progress will be critical tests in the coming months.