Elon Musk’s Clash with Trump Jeopardizes Government Contracts Worth $48 Billion

Elon Musk's expansive business ventures, which include SpaceX, Starlink, and Tesla, could face financial setbacks amounting to at least $48 billion over the next decade. The potential losses hinge on whether former President Donald Trump follows through on his implied threat to terminate the companies’ contracts with the US government. This information comes from a WIRED review of publicly available data.

Musk's criticisms towards the federal budget drew Trump's ire, with Trump suggesting that ending governmental subsidies and contracts for Musk's companies could be "the easiest way to save money." This highlights the federal government's broad discretion to terminate contracts for reasons like budget issues or changing priorities. However, the dissolution of these contracts could lead to significant ramifications for the US, particularly in areas such as defense, space exploration, and transportation.

The tensions between Musk and Trump have been publicly brewing over a spending bill supported by Trump and moving through Congress. The bill, named the One Big Beautiful Bill Act, promotes Trump's priorities including tax cuts and increased funding for border security, but it could also increase the national debt by $3 trillion, as per official estimates.

Musk has voiced concerns about the escalating national debt, warning it could lead the country into "de facto bankruptcy". The total value of the government contracts with SpaceX and Tesla equates to about 2 percent of the projected deficit attributed to the new spending bill.

Some observers initially anticipated Musk's financial contributions to Trump’s reelection campaign would benefit ventures like SpaceX, which has historically engaged in significant government work. Yet, the fallout between Musk and Trump now poses a business risk.

Prospective opportunities may vanish for various Musk enterprises. For instance, SpaceX's Starlink might miss out on overseas work, Tesla may no longer provide armored vehicles to the State Department, and Musk's Boring Company could lose a potential contract for drilling an Amtrak train tunnel. Moreover, Tesla shares fell by over 14 percent, erasing $152 billion from the company's market capitalization, although there has been some recovery since.

Should Trump pursue further actions against Musk’s public criticisms, federal investigations and legal actions might cost Musk approximately $2.37 billion in purported penalties, based on congressional estimates.

Musk and the White House did not respond to requests for comments on these developments.

Rocket Ship
SpaceX plays a critical role in government projects, especially with rocket launches and satellite-based internet sales. Beyond NASA, the US military relies heavily on SpaceX for satellite launches that secure communications, conduct intelligence, and support GPS functions. In the near future, SpaceX is expected to receive around $34 billion from NASA and the US military for these rocket projects.

The US is also committed to spending about $14 billion on SpaceX’s Starlink internet services at several federal locations. Though figures might include errors, many align with agency announcements. However, some funding is contingent on congressional approval, and parts could divert to SpaceX’s competitors.

Despite facing competition from other firms, technical difficulties have solidified SpaceX’s leading position in the industry. Elon Musk mentioned that SpaceX would generate about $15.5 billion in revenue this year, which is double previous revenue estimates from two years ago.

WIRED did not delve into contract specifics or explore potential deals through intermediaries, such as agencies buying ads on Musk’s X social platform. It is known that the US government fleet includes Tesla electric vehicles. The General Services Administration has purchased services from Tesla, although their fleet report doesn't specify vehicle manufacturers or future spending plans.

Musk has benefited from governmental assistance over the years. An analysis by The Washington Post showed Musk's companies received at least $38 billion in government-related financial aid since 2003. A New York Times analysis last year identified $15.4 billion in contracts with federal government entities over a decade related to Tesla and SpaceX.

Meanwhile, Musk attempted to slash federal expenses as head of the Trump administration’s Department of Government Efficiency (DOGE), claiming savings of $180 billion since this year’s start. However, such numbers are debated. DOGE's efforts have faced legal hurdles and criticisms from various quarters, including state actors and Trump's aides.

The Trump administration continues to underscore cost-cutting, with federal hiring freezes and an emphasis on financial prudence.