Tesla (TSLA) stock dropped nearly 5% today after President Trump threatened to launch a probe into the billions of dollars in government subsidies given to Elon Musk’s tech ventures, from cars to satellites.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 55% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Historic Musk
In a post on Truth Social, Trump reignited his war of words with Musk by declaring that “Elon may get more subsidy than any human being in history, by far.”
He added that without these subsidies, Musk “would probably have to close up shop and head back home to South Africa. No more rocket launches, satellites, or electric car production, and our country would save a fortune.”
He even threatened to get DOGE – the Department of Government Efficiency once led by Musk – to take a good, hard look at the scale of subsidies offered to Tesla, Starlink satellites, and SpaceX. “BIG MONEY TO BE SAVED!” Trump thundered.
Tesla has received a raft of support from the U.S. government over the last decade or more. This includes a $465 million low-interest loan from the U.S. Department of Energy to build the Model S in 2010. It has been fully repaid.
From 2010 to 2019, U.S. consumers buying Teslas claimed roughly over $1 billion in federal EV tax credits, or up to $7,500 per vehicle.
Nevada awarded Tesla tax incentives valued at up to $1.287 billion to help build a gigafactory, with New York State shelling out $750 million via the Buffalo Billion program for Tesla/Panasonic solar panel and roof manufacturing.
In total, Tesla, alongside SpaceX and others, reportedly received at least $38 billion over the past two decades, including contracts, loans, tax credits, and subsidies.
According to the Washington Post, Tesla-specific government contracts account for over $7 billion, while regulatory credit sales added another $6 billion.
Direct federal support to Tesla beyond contracts and tax credits amounts to about $2–3 billion, counting the DOE loan, EV tax credits, and some grants.
Bill Bashing
Whether a probe will take place into these subsidies is uncertain. Trump’s message seems to have followed continued criticism from Musk over the president’s “big beautiful bill.”
“If this insane spending bill passes, the America Party will be formed the next day,” Musk said on X, reprising his call for a new political party in the US. He also denied that his opposition is based on preserving subsidies for his companies, writing in another post: “I am literally saying CUT IT ALL. Now.”
Indeed, the bill seems to have been the issue that darkened the previously close relationship between Trump and Musk in the first few months of the administration.
What is more long-standing, however – despite buying himself and his staff a new Tesla car earlier this year – is Trump’s lukewarm attitude toward electric cars.
In his message today, he wrote: “Electric cars are fine, but not everybody should be forced to own one.“ Doubling down on that sentiment could make Tesla and Musk’s life even more uncomfortable in the months ahead.
Is TSLA a Good Stock to Buy Now?
On TipRanks, TSLA has a Hold consensus based on 14 Buy, 12 Hold and 9 Sell ratings. Its highest price target is $500. TSLA stock’s consensus price target is $291.31 implying a 8.30% downside.
