Elon Musk and President Trump Feud Impacts Tesla, SpaceX | Bloomberg Technology 6/5/2025

Key Concepts

• Trump-Musk Feud: Political and business implications of the conflict between Donald Trump and Elon Musk.
• Tesla Stock Volatility: Market reaction to Elon Musk's actions and potential impact on Tesla's future.
• Government Contracts: The importance of government contracts and subsidies for Tesla and SpaceX.
• Robotaxi: Tesla's autonomous taxi project and its dependence on favorable regulations.
• Cursor (Anysphere): AI-powered coding platform and its rapid growth.
• Rare Earth Minerals: China's control over rare earth minerals and its implications for trade negotiations.
• Stablecoin Circle IPO: Initial public offering of Circle, a stablecoin company.
• Nintendo Switch Two: Release of the new Nintendo gaming console and its features.

Trump-Musk Feud: Political and Business Implications

• Initial Conflict: The feud began with Elon Musk criticizing Trump's tax bill and accusing him of being associated with Jeffrey Epstein. Trump retaliated by calling Musk "crazy" and claiming he was kicked out of the administration.
• Political Implications:
  • Musk's attacks could damage Republican messaging around Trump's legislative accomplishments.
  • Musk deployed $290 million in the 2024 election cycle, and his stance could affect Republican fundraising.
  • Musk's access to government systems raises national security concerns.
• Business Implications:
  • Trump threatened to cancel government contracts for Musk's companies, including SpaceX.
  • Tesla's stock experienced significant volatility due to the feud.
  • The feud could impact the rollout of Tesla's Robotaxi project, which relies on favorable regulations.
• Musk's Stance: Musk initially took a maximalist position, calling for Trump's impeachment and suggesting a new political party. He later signaled a willingness to lower the temperature.
• Trump's Perspective: Trump claimed Musk was upset about EV incentive cuts, but Musk denied this, stating he has long opposed subsidies.
• Potential Reconciliation: Some believe a reconciliation is possible due to Musk's history of securing government funding and the mutual dependence between the government and Musk's companies.

Tesla Stock Volatility and Market Sentiment

• Stock Performance: Tesla's stock experienced its worst week since February 2025, losing $40 billion in market capitalization. However, the stock rebounded by over 6% in one session.
• Market Sentiment: The market is betting against Elon Musk himself, rather than the long-term future of Tesla.
• Investment Strategy: Some investors see the volatility as a potential entry point and have added to their holdings.
• Risk Factors: Tesla is considered inherently volatile due to Elon Musk's actions and unpredictability.
• Customer Base: Musk's political statements could alienate both left-leaning and MAGA customers, impacting Tesla sales.

Government Contracts and Subsidies

• Financial Benefits: Tesla and SpaceX have benefited from over $20 billion in grants, subsidies, and direct contracts since 2000.
• SpaceX Dependence: NASA is heavily dependent on SpaceX's Dragon spacecraft for transporting humans and cargo to the International Space Station (ISS).
• Potential Impact of Contract Cancellations: Canceling government contracts would significantly impact SpaceX's revenue stream, although the company has diversified with Starlink.
• Musk's Frustration: Musk has expressed frustration that his influence and access have not translated into favorable business priorities, such as the EV tax credit.

Robotaxi and Regulatory Environment

• Robotaxi Rollout: The feud could result in a protracted rollout of Tesla's Robotaxi project due to regulatory uncertainty.
• Regulatory Risk: The regulatory environment is a key risk factor for Tesla's Robotaxi ambitions.
• Potential Benefits of Robotaxi: Robotaxi has the potential to be the lowest-cost-per-mile transportation provider.
• Musk's Position on EV Subsidies: Musk has consistently stated that he would be fine if EV subsidies were cut, arguing that they support weaker manufacturers and do not significantly influence Tesla buyers.

Cursor (Anysphere): AI-Powered Coding Platform

• Overview: Cursor is an AI-powered coding platform that aims to revolutionize software development.
• Valuation and Revenue: The company has a valuation of nearly $10 billion and generates $500 million annually.
• Technology: Cursor is powered by an ensemble of custom and open-source AI models, including those from Anthropic and OpenAI. It makes over half a million model calls per day on its custom models.
• Target Market: The primary target market is professional software developers, but the platform is also attracting less technical users.
• Growth Strategy: The company's growth is driven by subscriptions, particularly from enterprise clients. Over half of the Fortune 500 are using Cursor.
• Future Plans: Anysphere aims to build another company and invest in frontier AI coding research.

Rare Earth Minerals and Trade Negotiations

• China's Dominance: China controls a significant portion of the world's rare earth mineral supply.
• Rare Earth Permits: China has granted rare earth permits to some U.S. auto suppliers, seen as a potential olive branch in trade negotiations.
• Potential Trade Deal: A potential quid pro quo could involve exchanging rare earth minerals for semiconductor access.
• Challenges: Negotiating a trade deal is complex, as China holds the cards on rare earth minerals, while the U.S. has a massive consumer base and influence in other countries.

Stablecoin Circle IPO

• IPO Details: Circle, a stablecoin company, raised nearly $1.1 billion in an outsized offering.
• Oversubscription: The IPO was significantly oversubscribed, indicating strong investor demand.
• Regulatory Environment: Positive signs from the government regarding stablecoin support have contributed to the favorable IPO conditions.
• Investment Strategy: Venture Science, a founding partner and Circle investor, is holding onto its shares.

Nintendo Switch Two

• Release: The Nintendo Switch Two has been released, generating significant excitement among gamers.
• Features: The new console is bigger, with better graphics and a custom NVIDIA chip.
• Launch Games: The launch slate of games is considered somewhat disappointing, with refreshed versions of popular games from the original Switch.
• Enthusiasm: Gamers lined up for blocks outside of GameStop stores, with some waiting for days or even months to get the console.
• Market Impact: The success of the Switch Two is crucial for Nintendo, as almost all of its revenue comes from the Switch platform.

Conclusion

The news segment covers a range of topics, from the political and business implications of the Trump-Musk feud to the launch of new technologies like the Nintendo Switch Two and the IPO of Circle. The feud has created uncertainty and volatility in the market, particularly for Tesla, while also raising questions about government contracts and regulatory policies. Despite the drama, there is a sense that cooler heads may prevail, and that the government and Musk's companies will need to find a way to work together. The segment also highlights the rapid growth of AI-powered coding platforms like Cursor and the ongoing trade negotiations between the U.S. and China, particularly regarding rare earth minerals.