U.S. President Donald Trump on Tuesday threatened to cut off government subsidies to Elon Musk’s companies, as tensions between the two continued to grow over the president’s tax and spending bill.
The Senate passed the bill earlier in the day.
Musk, who has criticized the legislation for removing electric vehicle incentives, has said the policy change would hurt Tesla, which has benefited from EV credits.
Tesla shares dropped more than 5% on Tuesday. Smaller EV companies Rivian and Lucid also lost 2% and 3.8%, respectively. The $7,500 tax credit for EV buyers, one of several programs Tesla has relied on, is among the subsidies affected by the bill.
Musk responded to Trump’s threat by posting on social media: “I am literally saying CUT IT ALL. Now.”
The disagreement comes as Tesla faces rising pressure. Analysts expect weak second-quarter delivery numbers, and the company’s future earnings could be hit by the loss of tax credits.
Tesla’s robotaxi plans, currently being tested in Texas, also depend on government approvals. Without federal support, Tesla’s projected gains in autonomy and valuation could slow.
Trump claimed Musk may have received more government money than anyone else and said cutting off subsidies would save the country a fortune. He also questioned Musk’s role in government efficiency programs and made further remarks on social media. Musk previously helped lead the Department of Government Efficiency before stepping away in May.
Tesla has earned nearly $11 billion by selling emissions credits to other automakers, which helped it avoid a loss last quarter. If the government ends those programs, Tesla could face additional financial strain.
Meanwhile, Musk has suggested he might start a political party to oppose the new tax policy.
The transportation department, which oversees vehicle design, will decide if Tesla can move forward with plans to launch robotaxis without steering wheels or pedals. At the same time, SpaceX, Musk’s space company, holds about $22 billion in federal contracts that could also come under review.
Trump was asked Tuesday whether he might deport Musk, a naturalized U.S. citizen. He responded, “I don’t know. We’ll have to take a look.”
