Will tech giants' involvement in politics lead to their own destruction? Is Musk's business empire crumbling after his split with Trump?

With the support of the Trump administration, Musk briefly became a symbolic figure in Washington, which also led to soaring market capitalization for his TSL and SpaceX. However, from the fallout with Trump to controversies surrounding Robotaxi and Grok AI, he has been stepping onto 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: Elon Musk’s Empire Is Creaking Under the Strain of Elon Musk)

From Trump’s Favorite to Political Abandonment: The Sudden Turn in Musk’s 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 disordered starting point of his 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 sending the entire federal agency "into a wood chipper." Despite provoking significant public discontent, various sectors still chose to cater to Musk to please Trump, indirectly causing the market capitalization of SpaceX and xAI to soar during his initial foray into politics.

However, the deep binding of the relationship and interests between the two quickly led to problems. Musk's prominence caused his political support to drop by 20% in just one year, sparking a backlash against Musk and TSL in the U.S. Since its peak after the election, TSL's stock price has almost been halved within three months.

Musk and Trump part ways: Ideological differences become the trigger.

If Musk can maintain a close relationship with Trump, the aforementioned situation may not necessarily cause a fatal blow. After all, Trump not only urged the public to buy TSL at that time 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 could never be elected president without him, and further accused Trump of being an accomplice in the Jeffrey Epstein sex scandal. Trump retaliated by threatening to cancel all contracts related to TSL and SpaceX.

The dispute between the two cooled over time. Although Musk deleted posts related to Epstein and apologized, he later criticized Trump’s "Great and Beautiful Act" after cutting subsidies for TSL due to tax reduction measures. Trump coldly remarked about this matter:

Do you know what DOGE is? DOGE is a monster that might turn around and swallow Musk.

(Musk announced the establishment of the "American Party", Trump: considering deporting him back to South Africa)

The chips are all in Trump's hands, how should Musk extricate himself?

What is concerning is that Trump's influence and threat to Musk are not as insignificant as one might imagine. The Bloomberg Billionaires Index shows Musk's assets are approximately $360 billion, but in reality, his wealth is highly dependent on the performance of his companies, especially the stock price of TSL, his relationship with the U.S. government, and his personal and corporate fundraising abilities.

And now, these three pillars appear to be on the verge of collapse under the evident rift between Trump and himself, and even investors have begun to express concerns about Musk's every move. Bloomberg commented:

Musk's company's finances are intertwined with each other and are highly tied to his every move, making it difficult to remain unscathed when problems arise. If Trump truly takes decisive action, he still has many tools at his disposal to strike at Musk's ventures, which could also lead to him facing an "invisible hand of retaliation."

From Musk's main business, see if the tech empire is in jeopardy.

Robotaxi's self-driving promise continues to break boundaries. Is Tesla's market capitalization overvalued or does it have explosive potential?

Elon Musk has always been pushing deadlines and making promises, from claiming that his cars would have full self-driving capabilities by 2015 to continuously delaying the target dates. Over the years, there have also been incidents of unintended acceleration and crashes, raising public concerns. Despite this, investors, including Ark Invest founder Cathie Wood, still believe in him. And from Tesla's perspective:

In terms of market capitalization, TSL's market capitalization is about 20 times that of GM (GM), however, GM's vehicle annual sales are three times that of TSL. Such a gap has only two possibilities: either TSL is overvalued, or it is about to experience explosive growth.

However, the fact is that TSL's vehicle deliveries have declined for two consecutive quarters, the Cybertruck has only sold 1/10 of what was expected, and the affordable vehicle project has been quietly postponed. There are also reports of organizational chaos and high-level departures within the management. The new tax reform bill implemented by Trump has canceled the $7,500 tax credit for electric vehicles and carbon credit sales that TSL relied on, and JPMorgan predicts that the company's profits will be halved this year.

(Tesla Robotaxi vs Waymo: A deep dive into the technological routes and business layouts of the two self-driving giants)

Starship Crash: Political Interference Shakes SpaceX's Dominance

SpaceX has always been Elon Musk's most solid company, almost monopolizing the missions of satellite launches, cargo transport, and personnel transportation in the United States, but now it is also in turmoil.

The company previously rejected the Ukrainian military's request to activate the Starlink network to assist in counterattacking Russia during the Ukraine-Russia war, raising doubts about its position; subsequently, due to Musk's criticism of the Inflation Reduction Act, Trump reached out to SpaceX competitor EchoStar while also pivoting within the act to inject $4.1 billion into Boeing's SLS rocket, actions that are clearly a response targeting Musk.

As the company that Musk trusts the most, SpaceX is now unbalanced in its space business landscape due to Musk's personality and political maneuvers.

( Ark Analysis SpaceX's grand ambitions, estimated valuation will increase sevenfold by 2030 )

xAI is burning cash with frequent controversies, relying on SpaceX and TSL for funding.

Musk's newly established xAI is his latest gamble and also the biggest money-burning machine. The latest model, Grok 4, is claimed by him to be the world's strongest AI, but it was immediately found to contain anti-Semitic, white supremacist, and genocidal rhetoric after its launch, and it often references Nazi memes and conspiracy theories, sparking public outcry.

( From anti-Semitism to AI girlfriend? Musk's Grok "companion mode" female role sparks controversy )

What worries investors is that xAI is expected to lose up to 13 billion dollars this year, with a revenue of only 500 million, but plans to raise over 20 billion, which also includes funding from SpaceX. Musk even stated that he would ask the TSL board to also provide funding to support xAI.

When Heroes Become Sources of Chaos: Is Musk's Tech Empire on the Brink of Collapse?

Musk has always been a master of survival in desperate situations, with both TSL and SpaceX having been on the brink of bankruptcy. However, this time it is not just a single issue; from losing the support of the White House, founding a new party "American Party," to being stretched thin across his various enterprises, each matter consumes time, resources, and mental energy.

At the same time, as a promoter of global technological evolution, Musk's business empire is built not only on technology and innovation but also on his personal charisma and investors' trust. Today, these foundations are gradually crumbling due to his own political fanaticism, ideology, and rhetoric storm. As Bloomberg commented:

Although the president has the ability and means to harm Musk's business empire, if we have to say who is the biggest variable in that empire, Trump would probably have to rank behind Musk himself.

Now he has lost the protection of Trump, making himself the biggest risk in the corporate landscape. The empire has not fallen yet, but the cracks have already appeared. And the first brick was struck down by Musk himself.

This article discusses whether the tech giants' involvement in politics will self-destruct the Great Wall, and if Musk's business empire is collapsing after his break with Trump. First appeared in Chain News ABMedia.