Musk leaving Tesla's board is a good option.
The public rift between Musk and Trump has escalated into a superstorm sweeping through both the business and political circles in the U.S. This storm not only wiped out over $150 billion from Tesla's market value in a single day. When Musk attempted to counter Trump by proposing the formation of an "American Party," Trump coldly responded, "This relationship is over." The once-dominant world's richest man now appears to be struggling after venturing into politics.
Musk's recklessness, from ally to "traitor," marks a fatal turning point.
The cracks between Musk and Trump were evident long before. Although he expressed dissatisfaction with tariff policies as early as March while leading the "Department of Government Efficiency," Trump maintained a facade of cordiality, even hosting a dignified farewell party for Musk in late May and presenting him with a golden key "for special people."
Late on June 5, the situation took a sharp turn when Musk suddenly blasted Trump's "Big and Beautiful Act" as "disgusting," accusing him of "ingratitude" and openly supporting the impeachment of the president.
The fire was ignited unexpectedly. While the act's cancellation of electric vehicle tax credits hurt Tesla (a loss of $7,500 per vehicle in subsidies), Musk's real anger stemmed from a betrayal of principles: his core demand in joining Trump's camp was to reduce fiscal deficits, yet the act is projected to add $2.4 trillion to the deficit over a decade, rendering his government efficiency reforms a joke. He later retweeted links between Trump and Epstein's files, crossing a political red line. Trump immediately retaliated, saying, "I am very disappointed in Musk," hinting at canceling government contracts, causing Tesla's stock to plummet 14%.
In reality, Musk's involvement in politics and his fallout with Trump are two separate issues. During their honeymoon phase, Tesla's sales in Europe and the U.S. were already under pressure, as political figures often have lower popularity. Initially, it seemed possible to step back onto the original track, but now it appears he is sinking deeper. Forming the American Party not only risks a complete break with Trump but could also pit him against the Republican Party. Tesla does not need a political figure like Musk.
The backlash of a super IP, a fatal dilemma of being caught between a rock and a hard place—Musk now faces three major challenges:
Shaken business foundation: Tesla's sales have plummeted, SpaceX's test flight failed, and the threat of losing government contracts has left the pillars of his empire precarious.
Political isolation: The Republican Party is "unprecedentedly united" under Trump, while Democrats see him as an opportunist. His new party idea is a castle in the air. Throwing tantrums might have been fine in the past, but acting on them now could lead to significant losses in both business and politics.
Personal credibility in ruins: From "president's confidant" to "public enemy," he has long had enemies within the White House (rumors of a physical altercation with Treasury Secretary Besant).
While it's possible Trump might actively dismantle Musk's business empire, the likelihood is low. However, making life difficult for him is certainly possible—Tesla could face additional tariffs, and SpaceX might lose military contracts.
The greatest danger to his business empire is public opinion. Voters in Europe and the U.S. care about politics but dislike it, and they especially dislike political figures like Musk, even to the point of boycotting his products. In the future, Musk will inevitably have to choose: returning to business is the better option. If he has political ambitions, he may have to leave Tesla's board. Walking freely between the two is impossible.
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The storm in fundamentals could hit at any time, and it's hard to predict because both are strong-willed individuals. For us ordinary people, staying out of the way is the best choice. We can support Musk once the stock price risks have been released.
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