A once‑close relationship between Tesla CEO Elon Musk and former President Donald Trump has rapidly fractured, raising alarm across the electric fleet industry and rattling investor sentiment.
The falling out centers on Trump’s proposed federal tax and spending package, which seeks to eliminate key subsidies for electric vehicle companies—most notably Tesla—and is backed by the ex-president. Musk has vocally condemned the measure and even floated the idea of forming a new political party, igniting a public feud between the two influential figures.
Trump escalated tensions further by hinting at utilizing the newly proposed Department of Government Efficiency (DOGE) to investigate Elon Musk and Tesla, including threats to withdraw federal contracts and subsidies. He warned that without support, Musk “would probably have to close up shop.” Tesla’s stock dropped more than 5% in pre-market trading following the news.
Industry analysts warn that the split could trigger major ripple effects in the electric fleet market. Tesla benefits significantly from government incentives and contracts; any loss of federal backing could hinder its ability to fulfill large fleet orders and slow expansion plans .
Compounding the issue, Tesla is already grappling with a 13% year-over-year decline in Q2 vehicle deliveries, attributed in part to consumer boycotts tied to Musk’s political positions and broader macroeconomic factors.
While Musk continues investing in autonomous trucking and the “Robotaxi” vision, critics suggest his public battles may distract from core business objectives and damage relationships with federal and fleet partners.
As electric fleets remain a key growth area, stability in policy and executive alignment is critical. The unraveling of the Musk–Trump alliance highlights the challenge Tesla now faces in balancing political entanglements with its ambitions in EV infrastructure and large-scale fleet deployment.
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