The Trump-Musk Feud: Navigating Political Volatility in Space Tech and EVs for Long-Term Gains

Nathaniel StoneThursday, Jun 5, 2025 4:09 pm ET
36min read

The public clash between Donald Trump and Elon Musk has escalated into a high-stakes battle with far-reaching implications for SpaceX,

, and the broader tech-government contracting ecosystem. While the feud has triggered short-term market jitters—driving Tesla's stock down and casting doubt on SpaceX's subsidies—the strategic importance of these companies' technologies to U.S. infrastructure and national security suggests a compelling long-term investment opportunity. Here's why investors should view the current turmoil as a buying opportunity.

The Threat to Subsidies and Contracts

SpaceX's government contracts—totaling over $560 million since 2024—are at the heart of the feud. Key projects include a $100 million NASA mission to launch an asteroid-detection telescope and a $1.8 billion classified defense contract for spy satellites. Meanwhile, Starlink's eligibility for $42 billion in rural broadband grants hinges on Musk's ability to navigate Trump's ire.

Tesla, too, faces existential risks. The One Big Beautiful Bill aims to eliminate EV tax credits and phase out production incentives, directly threatening Tesla's $2.76 billion in annual regulatory credit revenue. Musk's public feud with Trump—calling the bill a “disgusting abomination”—has amplified fears of subsidy cuts, fueling a 20% drop in Tesla's stock in early 2025.

Congressional Pushback as a Mitigating Factor

Despite Trump's threats, bipartisan pushback suggests SpaceX's contracts may be too strategic to abandon. A May 2025 poll found only 38% of Americans support Musk's dual role as a government official and corporate CEO—a figure that could pressure lawmakers to curb Trump's overreach.

Critically, SpaceX's defense and space programs—like Starlink's role in military communications and asteroid detection—are deemed vital to national security. A classified $1.8 billion contract with the Pentagon, for instance, is unlikely to be revoked without bipartisan backlash. Similarly, NASA's lunar and Mars programs rely heavily on SpaceX's rockets, creating inertia against abrupt cuts.

Trade Deals and Diversification of Revenue

While U.S. political volatility persists, SpaceX and Tesla are hedging risks through global expansion.

  • SpaceX's Starlink is already serving millions globally, with plans to launch tens of thousands of additional satellites to dominate low-Earth orbit. The EU's potential relaxation of autonomous driving rules could also benefit Tesla's Full Self-Driving (FSD) system, offsetting U.S. subsidy losses.
  • Tesla's China pivot remains contentious but lucrative. Despite a 49% sales drop in April - 2025, China's Gigafactory Shanghai produces half of all Tesla vehicles. The company's deep ties to Chinese manufacturing—despite Musk's political missteps—ensure steady cash flows.

Investment Thesis: Buy the Dip, Hold for Strategic Contracts

The current sell-off presents a rare entry point.

Short-Term Risks:
- Tesla's stock could face further dips if the One Big Beautiful Bill passes, and SpaceX's Starlink faces scrutiny over Musk's government role.

Long-Term Upside:
1. Contract Retention: SpaceX's defense and NASA ties are too critical to be axed. The Pentagon's reliance on Falcon 9 rockets and Starlink's global dominance will likely override political noise.
2. Trade Deal Optimism: Starlink's international growth and Tesla's gradual rebound in EU sales (once autonomous driving regulations ease) could stabilize valuations.
3. Congressional Checks: Bipartisan opposition to Trump's threats could cap the damage to subsidies.

Recommendation:
- Buy Tesla (TSLA) at current levels ($160–$170 range), targeting a rebound to $250+ by 2026 if subsidy risks subside.
- Hold SpaceX shares (via Tesla ownership or satellite equity stakes) as Starlink's $42 billion grant and defense contracts solidify its moat.

Conclusion

The Trump-Musk feud is a tempest, not a tsunami. While short-term volatility persists, SpaceX and Tesla remain indispensable to U.S. tech leadership. Investors who buy now—while the market overreacts to political theater—position themselves to profit from the companies' irreplaceable roles in space, defense, and EV innovation.

Final Take: Ride the dip, but keep an eye on congressional hearings and Starlink's global rollout. The long game favors the bold.