Elon Musk's Trump fallout poses deepening risks to Tesla, SpaceX

Elon Musk's empire isn't exactly crumbling, but it looks increasingly vulnerable as his falling out with President Trump intensifies.Why it matters: The world's richest person enjoyed ballooning wealth in the early days of his alliance with the president, but their partnership has collapsed after Musk assailed Republican spending plans.Driving the news: Tesla shares fell sharply again Monday after Musk said he'd launch a new political party, the America Party, and suggested a strategy of targeting a few key House and Senate seats in 2026.Musk is personally out nearly $20 billion — at least on paper — since breaking with President Trump last month, and his investors are out more than $100 billion on top of that.By the numbers: Tesla shares closed down 6.8% Monday.They're down about 14% since early June, when Musk first publicly blasted the "big, beautiful bill," which quickly spiraled into a full split with the administration.The big picture: Anyone who's at odds with Trump risks being at odds with his legion of supporters, including Republicans who control all three branches of government in Washington.Investors who were counting on favorable regulatory treatment for Tesla and a continued flow of government contracts for SpaceX now have reason to question where they stand.Ivana Delevska, founder of Spear Invest, recently sold off Tesla shares amid mounting risks associated with Musk's political entanglements: "While the opportunity is outsized the risks are very significant as well," she wrote Monday. "While the reward potential is clearly here the risks are significant as well."Threat level: Any sustained damage would come at a critical time for Musk's businesses.Tesla began rolling out robotaxis in Austin in June, in a preview of a service that the company deems as critical to its future.Tesla is also facing mounting global competition from the likes of Chinese EV maker BYD, which is rapidly gaining market share in China and Europe. And the company's sales have been tumbling amid a backlash over Musk's political involvement, with second quarter deliveries falling nearly 14%.SpaceX is hoping to send an uncrewed mission to Mars in 2026.What they're saying: "We expect that investors are growing tired of the distraction at a point when the business needs Musk's attention the most and only see downside from his dip back into politics," William Blair analyst Jed Dorsheimer writes in a research note.Yes, but: Musk was still worth over $100 billion more than the world's second-richest person, Mark Zuckerberg, as of Monday with an estimated net worth of about $361 billion, according to the Bloomberg Billionaires Index.The big question: Will board members try to get Musk to tamp down the political stuff?The Tesla board has historically been relentlessly supportive of Musk, though the WSJ reported in the spring that the board had launched a process to potentially identify a replacement CEO. Musk and Tesla chair Robyn Denholm denied it.Musk likely has more structural control at his myriad of private companies, like SpaceX and xAI, and more personal relationships with his largest investors, Axios' Dan Primack notes. Those businesses also don't have volatile public stocks or face the same sort of consumer brand pressures that can bedevil Tesla.The bottom line: Investors were heartened when Musk recently declared he was effectively done with politics and would refocus his time on his companies — but that pivot didn't last long."We would prefer this effort to be channeled towards the robotaxi rollout at this critical juncture," Dorsheimer says.Contributing: Ben Berkowitz

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