With the support of the Trump administration, Musk briefly became a symbolic figure in Washington, causing the market value of Tesla and SpaceX to soar. However, from the break with Trump to controversies surrounding Robotaxi and Grok AI, he has gradually walked the path of self-destruction. When the president turns into an enemy and investors begin to waver, it inevitably raises concerns about whether Musk's tech empire is collapsing.
(The following content is sourced from Bloomberg, translated by Chain News, with the original title being: Elon Musk’s Empire Is Creaking Under the Strain of Elon Musk)
From Trump's favorite to a political pawn: Musk's abrupt turn in his political journey
On May 30, when Musk appeared at the White House wearing a DOGE hat, the bruise on his face unexpectedly became the focus. He explained that it was caused by his 5-year-old son. This may just be a farce, but it also marked the beginning of his chaotic entry into politics.
As the core of power and the best spokesperson during Trump's second term, Musk served as the 'Minister of Government Efficiency (DOGE)', mocking civil servants, cutting funding for food banks, and even boasting about putting the entire federal agency 'into a wood chipper'. Even though this sparked considerable public outrage, various sectors still chose to cater to Musk to please Trump, indirectly causing the market value of SpaceX and xAI to rise during his early days in politics.
However, the deep interconnection of their relationship and interests quickly led to problems, with Musk's overexposure causing his political support to drop by 20% in just one year, triggering a wave of backlash against Musk and Tesla in the United States. Since the peak after the election, Tesla's stock price has almost halved in three months.
Musk and Trump part ways: ideological differences as the trigger
If Musk could maintain a close relationship with Trump, the aforementioned situation might not have caused a fatal blow. After all, at that time, Trump not only called on the public to buy Tesla but also pushed the government to promote regulations favorable to it.
However, a few days later, Musk went on a rampage on social media X, claiming that Trump would not be able to be elected president without him and accusing Trump of being an accomplice in the Jeffrey Epstein sex scandal. Trump retaliated by threatening to cancel all contracts related to Tesla and SpaceX.
The dispute between the two cooled over time; although Musk deleted posts related to Epstein and apologized, he soon criticized Trump’s (Big and Beautiful Act) after a tax measure reduced subsidies for Tesla. Trump coldly responded to this matter:
Do you know what DOGE is? DOGE is a monster that might turn around and swallow Musk.
(Musk announces the founding of the 'American Party', Trump: considering sending him back to South Africa)
With the chips in Trump's hands, how can Musk extricate himself?
What worries people is that Trump's influence and threat to Musk are not as negligible as imagined. Bloomberg's Billionaires Index shows Musk's assets at about $360 billion, but in reality, his wealth is highly dependent on the performance of his companies (especially Tesla's stock price), relationships with the U.S. government, and his personal fundraising capabilities.
Now, with these three pillars visibly shaking due to the obvious animosity between Trump and him, even investors have begun to express concerns about Musk's every move. Bloomberg commented:
Musk's companies are intertwined and highly dependent on his every move, making it difficult to remain unscathed when issues arise. If Trump truly goes hard, he still has many tools to strike at Musk's business, which could lead to an 'invisible hand of retribution'.
From Musk's core business, examining whether the tech empire is on the brink of collapse
Is the Robotaxi self-driving promise continuously being broken? Is Tesla's market value overestimated or does it have explosive potential?
All along, Musk has been pushing deadlines and making promises, from claiming his cars would have full self-driving capabilities by 2015 to now, when target dates are still being postponed. Accidents involving wrong turns and crashes have occurred in recent years, raising public concerns. Nevertheless, investors like ARK Invest founder Cathie Wood still believe in him. As for Tesla:
In terms of market capitalization, Tesla's value is about 20 times that of General Motors (GM), yet GM's vehicle sales are three times that of Tesla. Such a gap could mean only two things: either Tesla is overvalued, or it is about to experience explosive growth.
However, the reality is that Tesla's vehicle deliveries have declined for two consecutive quarters, the Cybertruck sold only 1/10 of expectations, and the budget car project has been quietly delayed, with reports of chaos within management and high-level departures. Trump's newly implemented tax reform has also canceled the $7,500 tax credit for electric vehicles that Tesla relied upon and the sale of carbon credits, with JPMorgan predicting that the company's annual profit will be halved this year.
(Tesla Robotaxi vs. Waymo: a revelation of the technology routes and business layouts of the two self-driving giants)
Starship crash: political interference shakes the dominance of SpaceX
SpaceX has always been Musk's most solid company, almost monopolizing the tasks of satellite launches, cargo transport, and personnel transport in the United States, but it is now also in turmoil.
The company had previously refused to allow the Ukrainian military to use the Starlink network to assist in counterattacking Russia during the Ukraine-Russia war, raising doubts about its stance; subsequently, Musk criticized the (Big and Beautiful Act), while Trump engaged with SpaceX competitor EchoStar on one hand and turned to inject $4.1 billion into Boeing's SLS rocket in the act, with various actions clearly aimed at retaliating against Musk.
As Musk's most dependable company, SpaceX is now being affected by Musk's personality and political maneuvers, leading to an imbalance in its space business landscape.
(ARK analyzes SpaceX's grand ambitions, estimating a sevenfold valuation by 2030)
xAI burns cash and faces frequent controversies, relying on SpaceX and Tesla for financial support
Musk's newly established xAI is his latest gamble and also the biggest money-burning machine. The latest model Grok 4 is touted by him as the world's strongest AI, but upon release, it was immediately found to contain anti-Semitic, white supremacist, and genocidal rhetoric, often quoting Nazi memes and conspiracy theories, provoking public outrage.
(From anti-Semitism to AI girlfriend? Musk's Grok 'partner mode' female character sparks controversy)
What worries investors is that xAI is projected to lose as much as $13 billion this year, with revenues of only $500 million, yet it plans to raise over $20 billion, which also includes funding from SpaceX. Musk even stated that he would ask the Tesla board to also allocate funds to support xAI.
When a hero becomes a source of chaos: is Musk's tech empire on the brink of collapse?
Musk has always been a master of survival in dire situations, with both Tesla and SpaceX having been on the brink of bankruptcy. However, this time it's not just a single issue; from losing the support of the White House, founding a new party called the 'American Party', to being overwhelmed by various companies under his wing, everything is time-consuming, costly, and mentally exhausting.
Meanwhile, as a global driver of technological evolution, Musk's business empire is not only built on technology and innovation but also on his personal charisma and investor trust. Now, these foundations are gradually crumbling due to his own political fanaticism, ideology, and stormy rhetoric. As Bloomberg commented:
The president, although capable of harming Musk's business empire, if forced to name the biggest variable in that empire, would probably have to rank behind Musk himself.
Now he has lost Trump's protection, making himself the biggest risk in the corporate landscape. The empire hasn't fallen yet, but cracks have already appeared. And the first brick was struck down by Musk himself.
This article discusses whether the tech giant's foray into politics will lead to self-destruction, and whether Musk's business empire is collapsing after his break with Trump. Originally appeared in Chain News ABMedia.
