Trump suggests slashing Tesla subsidies, Musk says ‘cut it all’

US President Donald Trump on Tuesday suggested the department of government efficiency (DOGE) should review the subsidies to Tesla CEO Elon Musk's companies to save money, reigniting a war of words between the world's most powerful person and its richest.

Trump's remarks came after Musk, a Republican mega-donor, renewed his criticism of the sweeping tax-cut and spending bill and vowed to unseat lawmakers who supported it despite campaigning on limiting government spending.

Tesla shares fell more than 6% before the market opened as the feud could add fresh hurdles for the business empire of Musk, whose main source of wealth, the electric automaker, is betting on the success of robotaxis being tested in Texas.

The US transportation department regulates vehicle design and will play a key role in deciding if Tesla can mass-produce robotaxis without pedals and steering wheels, while Musk's rocket firm SpaceX has about $22bn (R387bn) in federal contracts.

“Elon may get more subsidy than any human being in history, by far, and without subsidies Elon would probably have to close up shop and head back home to SA,” Trump said in a Truth Social post, referring to the department of government efficiency.

“No more rocket launches, satellites or electric car production and our country would save a fortune. Perhaps we should have DOGE take a good hard look at this? Big money to be saved.”

In response, Musk said on his own social media platform X: “I am literally saying cut it all. Now.”

Trump said Musk was upset because he lost the EV mandate in the recent tax and spending bill and warned the Tesla CEO “could lose a lot more than that”.

Treasury secretary Scott Bessent also pushed back on Musk's criticism that the bill would balloon the deficit, saying “I'll take care of” the country's finances.

Trump had in early June threatened to cut Musk's government contracts when their relationship erupted into an all-out social media brawl over the tax-cut bill, which non-partisan analysts estimate would add about $3-trillion (R53-trillion) to US debt.

The rift had resulted in Tesla shares erasing $150bn (R2.6-trillion) in market value as investors feared a tougher regulatory road for the self-driving robotaxi that underpin much of the company's valuation.

The stock recovered after Musk walked back some of his jabs, saying he had gone “too far”.

“Musk cannot stop himself. He is getting on Trump's bad side again. Tesla international sales have fallen significantly and if he loses US subsidies, US sales are likely to fall too,” said Stock Trader Network chief strategist Dennis Dick, who holds Tesla shares.

“Musk needs Trump. Trump does not need Musk,” he said.

Tesla sales dropped for a sixth straight month in Sweden and Denmark in June, data on Tuesday showed. Analysts expect the company to report a drop in second-quarter delivery figures on Wednesday.

After weeks of relative silence, Musk rejoined the debate on Saturday as the Senate took up the tax-cut package, calling it “utterly insane and destructive” in a post on X.

On Monday, Musk said lawmakers who campaigned on cutting spending but backed the bill “should hang their heads in shame”.

“They will lose their primary next year if it is the last thing I do on this Earth,” Musk said.

He also called again for a new political party, saying the bill's massive spending indicated “that we live in a one-party country, the porky pig party”.

The criticism marked a dramatic shift after the billionaire spent nearly $300m (R5.3bn) on Trump's re-election campaign and led the administration's controversial DOGE initiative.

Musk has argued the legislation would greatly increase the national debt and erase the savings he said he achieved through DOGE.

It remains unclear how much sway Musk has over Congress or what effect his opinions might have on the bill's passage. Republicans have expressed concern that his on-again, off-again feud with Trump could hurt their chances to protect their majority in the 2026 midterm congressional elections.

Reuters