Musk’s empire tells its own DOGE story

By Liam Denning and Thomas Black

Few — especially taxpayers — would deny that reducing the cost and inefficiency of government while eliminating fraud is a worthy goal. And there’s a beguiling logic to the idea that Elon Musk is ideally suited to the task.

To that end, the world’s richest man, deputized by the world’s most powerful man, is trying to reinvent a government that also regulates, subsidizes and does business with him. He has a personal fortune of about $350 billion and a track record of running groundbreaking, highly valued companies, from Tesla Inc. to SpaceX and Neuralink, to name but a few.

But with each passing day, the financial conflicts of interest that run through everything Musk is doing for President Donald Trump as the de facto head of the newly created Department of Government Efficiency become more apparent.

While Musk’s private sector successes are undeniable, the government isn’t a business. Streamlining a federal budget in the trillions of dollars is more nuanced than mass firings and comes with tough choices about how public services are allocated. Much of what DOGE has accomplished in its short life thus far is performative, albeit headline-grabbing and deeply disruptive. Moreover, one of Musk’s most prominent failures in the past couple of years involved Tesla touting, and then not delivering, a low-price electric vehicle.

The surge in value of Musk’s various businesses since Election Day shows investors believe he stands to gain financially. Musk’s estimated net worth approached half a trillion dollars in mid-December, according to data compiled by Bloomberg. The value of his biggest and most liquid asset, a 12.8 per cent stake in Tesla, almost doubled in the six weeks after the election, taking the company’s market capitalization to more than $1.5 trillion. Meanwhile, closely held Space Exploration Technologies Corp., known as SpaceX, was revalued 67 per cent higher in an equity-raising round in December, making it the world’s most-valuable tech startup. Even X Holdings Corp. is reportedly in talks to raise new money at a valuation matching the $44 billion Musk paid for the sputtering social media company a few years ago, a remarkable turnaround that reflects the spur to advertisers that has come from its owner’s ties to government as well as a stake in artificial intelligence venture xAI.

The benefits to Musk are, however, spread unevenly across his empire and come with risks. Tesla’s stock has given up more than 80 per cent of its Trump bump as investors evaluate whether his preoccupation with DOGE benefits the company faster than it corrodes the brand and offsets existing weaknesses. Sales plunged 45 per cent last month across Europe even as rival EV makers experienced a boost in demand. Although SpaceX looks to be in an enviable position, Trump’s patronage is hardly indubitable. And Musk’s demonization of Democrats could leave the rocket developer exposed when power shifts again in Washington. Also, the more prominent Musk becomes, the more likely that questions about conflicts will be asked, leading more Americans to wonder about the wisdom of one man controlling so many companies with critical technologies spanning media, transportation and communications intertwined with government, some with national security implications.

The three most obvious potential benefits to Tesla from Musk’s role in government concern regulation, access to foreign markets and federal procurement. All look nebulous compared with the real problems circling the company.

Trump’s deregulatory agenda, amplified by DOGE’s mass firings, portends a hollowing out, and potentially cowing, of government bodies responsible for scrutinizing Tesla. These include the National Highway Traffic Safety Administration, the National Labor Relations Board, the Securities and Exchange Commission and the Department of Justice. A lighter touch on Tesla’s autonomous vehicle ambitions plus, perhaps, supportive federal legislation around self-driving vehicles are particularly intriguing prospects for investors.

There is less here than meets the eye. Tesla’s big problem isn’t overbearing regulators; it’s an undercooked product. Musk has been marketing a robotaxis-everywhere vision for years. That he now touts as a victory the imminent launch of a geofenced service in just one US city — something rival Waymo LLC has done for some time — actually represents a big climbdown. It also isn’t clear that federal robotaxi legislation is even needed to foster deployment, as Waymo’s expansion shows. Moreover, any attempt to lighten regulatory oversight could undermine public trust in robotaxis.

Musk’s recent sit down with Prime Minister Narendra Modi of India demonstrated how Musk can use the White House as his personal meeting room with world leaders. Again, it sounds bullish, but Tesla’s push into India could be subject to progress on a wider US-India trade deal, with Trump calling the idea of any Tesla factory being built there “unfair” to the US.

Similarly, a murky story about a State Department proposal to buy $400 million worth of “armored” Tesla EVs appears to hold out the prospect of federal dollars flowing directly to Tesla. The plan was apparently rescinded after media scrutiny, but, even if it wasn’t, Tesla would need a lot of those to offset its biggest, all-too-tangible problem: Faltering EV sales worldwide.

Evidence is mounting that Musk’s embrace of far-right politics is deterring customers in key markets such as California and Europe, which together accounted for an estimated 30 per cent of Tesla’s EV sales in 2024. YouGov conducted polls in Germany and the UK in mid-January that found Musk was viewed unfavorably and that his meddling in the countries’ politics was unwelcome, according to Bloomberg News. Then there’s Trump’s animosity toward EVs, which poses an additional threat, since, as much as Musk touts libertarian principles, Tesla has become increasingly dependent on subsidies to boost flagging profit margins.

Unlike with Tesla, SpaceX entered the DOGE era with momentum. Musk has enormous leverage over the commercial space industry and NASA because SpaceX, in which he holds a 42 per cent stake, according to data compiled by Bloomberg, developed a rocket-launch system that is about 90 per cent cheaper than past alternatives. Also, its Starlink satellite communications unit has commercial and strategic appeal to governments and individuals worldwide. Not that Trump’s victory isn’t valuable to SpaceX. The potential benefits for such a company — one that is regulated by and signs contracts in the hundreds of millions of dollars with a federal government where Musk has broad reach — look far clearer than for Tesla.

Trump says Musk won’t deal directly with space-related issues in his DOGE work. Even if that proves to be the case, influence over budgets and headcount, plus the ability to speak directly to the president, offer potentially effective ways to shape federal agencies. Most relevant are the Federal Aviation Administration, which regulates anything that flies, and NASA, SpaceX’s largest customer. Musk is pushing the FAA to upgrade its information technology networks with Starlink’s satellite internet terminals, seeking to ship 4,000 of them to the agency, and at least one has already been installed, Bloomberg News reported. (It’s not clear how this affects a $2 billion contract awarded in 2023 to Verizon Communications Inc. to improve the national airspace system. It’s also not clear who at the agency would be willing to say “no” to Musk and risk blowback from Trump.)

Then there’s a recent executive order where Trump sought more control over independent agencies including the Federal Communications Commission. Starlink depends on FCC approvals to launch and operate its 7,000 low earth-orbit satellites. The Pentagon had been working with SpaceX before Trump took office on a militarized version of Starlink’s service called Starshield.

Musk’s influence also matters for SpaceX competitors such as Boeing Co. and Lockheed Martin Co., which have struggled to keep pace. Consider that Musk just called for early retirement of the International Space Station, which represents a significant contract for Boeing. Instead, Musk would have NASA focus on his personal obsession, and a stretch goal for SpaceX, of sending astronauts to Mars. The situation is even more delicate for startups such as Rocket Lab USA Inc., which seeks to emulate SpaceX’s end-to-end satellite service through partnerships and will depend on even-handed regulators to pave the way for its rocket development and launches.

SpaceX and Starlink also have national security and geopolitical dimensions. World leaders seeking to win favor with Trump present a potential boon, even if Musk isn’t directly involved. That may be the case in Vietnam, which is planning to change a law that restricts foreign ownership of telecommunication services companies. The changes would allow Starlink, which has been in talks with that government for years, to deploy its system while maintaining full ownership.

That’s not nearly as direct as the pressure, with Trump’s help, that Musk applied to South Africa President Cyril Ramaphosa to relax a law aimed at redressing the racial inequality wrought by apartheid. The law would force SpaceX in South Africa — Musk’s birthplace — to allocate a 30 per cent shareholding to historically disadvantaged groups. Arguing with Ramaphosa on X, Musk labeled the law “racist.” Days later, Trump signed an executive order decrying a South African law on expropriations as well as the country’s stance on Israel. In another slap at Ramaphosa, none of Trump’s cabinet members will attend the Group of 20 meeting that South Africa is hosting. Coincidence, perhaps, and thus far SpaceX hasn’t won an exemption from the law, as talks have stalled.

What sets Musk apart from a long line of corporate titans with a taste for political power is his strategy. Rather than the usual hedging of bets given the tendency for power to shift between the two parties every few years, Musk’s embrace of Trump and the MAGA movement is, to use a favored phrase of his, hard core. Musk perhaps regards November’s election result as representing some sort of structural change, with the Democrats he now openly disdains unable to regain power. This would be an odd assumption, given that Trump won with less than half the popular vote and Republicans barely gained control of Congress. It would also be a deeply troubling one, given Trump’s authoritarian impulses, expressed most viscerally in his attempt to overturn his election defeat in 2020.

It’s possible the world’s richest man, with influence stretching from smartphone screens to space travel and now the White House, simply regards himself as untouchable. That may explain why rather than just being a big donor discreetly seeking the odd favor, Musk has decided to become an active player in a game that could extend even beyond DOGE’s planned expiration in July 2026.

Such a gambit brings great power but also risk to him and his companies. Just under half of Americans say they disapprove of the job Musk is doing, according to a Washington Post-Ipsos poll. Recent protests at Tesla showrooms also attest to a backlash gathering. In China, home to Tesla’s biggest EV factory, Musk’s role as Trump-whisperer could translate to favor for his operations there or as easily make him a target for Beijing.

Above all, Musk’s peculiar role as a freewheeling senior adviser to the world’s most powerful person may make it easier for Trump to blame him when things go awry, casting him aside like so many others in Trumpworld when they cease to be useful. The founding principle of US governance is that power is neither absolute nor permanent. That Musk acts as if that isn’t necessarily the case is perhaps his biggest vulnerability. Or ours.