Elon Musk is confronting acute political headwinds after pouring nearly half a billion dollars into Republican campaigns, only to see Democrats seize Congress and the Texas governorship. In Washington, lawmakers plan to scrutinize federal contracts, subsidies, DOGE job cuts, and military satellite restrictions. Meanwhile, incoming Texas Governor Gina Hinojosa opposes state park land sales to SpaceX, seeks an end to corporate tax breaks, and wants a freeze on new data centers. Shares of both Tesla and SpaceX dropped over three percent in premarket trading as markets digested the regulatory risks.
Key points
Federal lawmakers intend to investigate government contracts, subsidies, and corporate ac…: Federal lawmakers intend to investigate government contracts, subsidies, and corporate actions linked to Musk's leadership at DOGE.
State-level opposition in Texas threatens SpaceX's land acquisitions and the tax incentiv…: State-level opposition in Texas threatens SpaceX's land acquisitions and the tax incentives previously granted to Musk's companies.
Restricting data-center development could significantly delay SpaceX's efforts to scale c…: Restricting data-center development could significantly delay SpaceX's efforts to scale computing capacity for a multitrillion-dollar market.
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The world's richest man spent nearly half a billion dollars to back Republican candidates and keep Texas red - a state home to his automaker Tesla, rocket-to-AI company SpaceX and a planned chipmaking venture between the two.
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Those bets unraveled as Democrats seized both chambers of Congress and Gina Hinojosa defeated Greg Abbott in the Texas governor's race, in a stinging rebuke to US President Donald Trump, a close Musk ally whom the billionaire helped elect.
Musk, who urged his followers on X to vote Republican as recently as Tuesday, now faces a resurgent Democratic Party that he has spent years antagonizing.
The GOP's largest donor even threatened retaliation last month on his social media platform after a report said Democrats were considering probes into his companies if they won midterms.
Shares of SpaceX fell 3.8% in premarket trading, while Tesla was down 3.6% as both stocks lagged the broader market.
One of Musk's biggest challenges could be slower approvals for the data centers crucial to tapping the $28.5 trillion…
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