BREAKUP: Trump-Musk Feud Erupts Over EV Tax Credit as Musk Launches Political Party
The political alliance between Donald Trump and Elon Musk publicly fractured this week after the U.S. President signed a sweeping tax and spending bill on July 4, 2025, eliminating a key $7,500 tax credit for electric vehicle (EV) purchases—directly impacting Musk's Tesla.
The move triggered an aggressive response from Musk, who accused Washington of betraying future industries in favor of the past, and announced plans to launch a third political party—named the “America Party”—to challenge lawmakers who backed the legislation.
Image Source: TrumpRealDaily on X
Trump, in turn, unleashed a volley of attacks, accusing Musk of going “off the rails” and aligning with the “radical left,” despite Musk’s prior public endorsement of his re-election.
The bill, which adds an estimated $3 trillion to the U.S. debt and raises the debt ceiling by $5 trillion, is a cornerstone of Trump’s post-2024 economic agenda. The President defended it as a blow against “EV mandates” and a step toward restoring consumer freedom.
“Electric cars are fine, but not everyone should be forced to own one,” he reiterated, framing the subsidy repeal as a move away from government overreach and toward market choice. But the legislation’s immediate impact on Tesla’s earnings—estimated at up to $1.2 billion annually by industry analysts—sparked fury from Musk, who said the bill was “handing out gifts to industries of the past while hammering innovation.”
In a series of posts on X, Musk declared war on both parties, calling them a “PORKY PIG PARTY” and pledging to back challengers against the bill’s supporters in the 2026 midterms.
He threatened to fund primary campaigns against sitting Republicans, arguing the current system is failing and vowing to spend “whatever it takes” to hold Congress accountable. His proposed America Party aims to offer a platform for voters disillusioned with the status quo, capitalizing on his vast influence among younger and tech-savvy demographics.
Trump, through his campaign’s official War Room account on X, dismissed Musk’s outburst as a betrayal. He posted that Musk had “become a TRAIN WRECK” and was now siding with Democrats. “Elon Musk knew, long before he so strongly endorsed me, that I was strongly against the EV mandate,” Trump wrote, warning that Musk’s actions had “unleashed chaos” and “complete disruption.”
Trump also revived old grievances, accusing Musk of pushing for H-1B visa expansions to hire cheaper foreign engineers and of overreaching in his influence over NASA. “Un-American,” Trump wrote.
The feud is as much about policy as politics. Tesla has long benefited from EV tax credits, and while Musk has occasionally downplayed their importance, analysts point to their role in boosting consumer adoption of electric vehicles and keeping Tesla competitive.
The Electrification Coalition estimates that EV mandates have attracted $250 billion in investment and created nearly a quarter-million jobs. But Trump’s administration insists the industry is now strong enough to survive without government crutches—and that Americans should decide what to drive, not bureaucrats.
Beyond corporate stakes, the dispute exposes a rift in the Republican coalition and casts uncertainty on the path to 2026. Musk’s political independence could siphon support away from both parties, particularly among libertarians, independents, and pro-tech conservatives.
Critics of Trump’s bill have voiced concern about its ballooning fiscal burden, calling it “another reckless giveaway.” Meanwhile, Musk’s detractors accuse him of protecting corporate subsidies under the guise of innovation, while using political threats to defend his bottom line.
Still, Musk’s entry into party politics marks a new phase in his increasingly public engagement with national affairs. In 2024, he donated over $275 million to Republican candidates, but his disillusionment appears complete.
He previously led a short-lived government advisory initiative, the Department of Government Efficiency (DOGE), which disbanded in May 2025. His pivot to direct political action reflects not just frustration with Trump, but a broader effort to reshape American politics to align with his techno-futurist vision.
The escalating clash now hangs over the coming election cycle. Whether Musk’s America Party gains traction or fragments the anti-Democrat vote remains to be seen.
But what’s clear is that a former alliance once hailed as a powerful union of political force and tech capital has collapsed into public acrimony, setting the stage for an unpredictable fight over the future of U.S. economic and environmental policy.