Shares in Tesla and SpaceX have fallen following the Democrats winning in the US mid-tier elections. Elon Musk has clarified that his companies do not rely on government contracts. Tesla does not have any government contracts and less than 10% of SpaceX’s earnings will come from government revenues this quarter.

Musk commented on X (formerly Twitter) in relation to discussions around federal contracts being cancelled.

Elon Musk Says Tesla Has No Government Contracts

• In response to the increasing debate, Musk confirmed that Tesla does not have any government contracts. Furthermore, he stated that federal incentives for electric vehicles have been cancelled by the Trump administration.
• This appears to be an attempt to reassure investors that it will not have an adverse effect on the company from a political standpoint.
• He also defended SpaceX’s government contracts stating that they provide a quality service at competitive prices.

SpaceX Government Revenues Will Be Less Than 10 Percent Of Total Revenue

• Musk went onto say that less than 10% of SpaceX’s revenue will come from government contracts this quarter. Over the next year it could be even less than 5%.
• However, Musk stated that SpaceX wins government contracts due to the competitive nature of its technology and quality service at competitive prices.
• He also added that he would be happy to terminate any government contracts they have.

Why Are Tesla And SpaceX Shares Falling?

Shares in Tesla and SpaceX have fallen following the Democrats having a strong showing in the US mid-tier elections. Investors are concerned that there will be increased regulation from the new political balance.

Shares fell around 5% in pre-market trading on November 4th and SpaceX was also hit. In subsequent trading sessions there were continued falls.

The market are especially concerned about changes in regulations concerning artificial intelligence, electric vehicles, data centres and federal spend.

Concerns About Musk’s Major Businesses In The US

• The election has caused more uncertainty about Musk’s major businesses in the US. Both Tesla and SpaceX operate significantly in Texas which the Democrats won key victories.
• Investors are concerned that there will be increased regulation impacting future growth in areas such as AI infrastructure, data centres and advanced technology.
• There are also concerns about the planned merger talks between Tesla and SpaceX and whether the new political landscape will make getting approval from regulators harder.

Elon Musk Defends SpaceX’s Federal Contracts

Despite the recent falls in shares, Musk is confident about SpaceX’s position in the aerospace industry. They play a key role in America’s space programmes and satellite launches.

They have government contracts which help with key aspects such as launching satellites and space missions relating to national security. Musk believes they provide competitive services at cheaper prices so it is beneficial to have government contracts.

His latest comment is an attempt to clarify that Tesla is different to SpaceX as they do not rely on government contracts.