The Bounds of Trump’s Friendship with Elon Musk

As we gear up for a second Trump presidency, one of the stars burning brightest in the new Trump firmament is Elon Musk. The co-founder of seven companies at last count, Musk is among the biggest beneficiaries of the Trump trade and is reportedly throwing himself into his new political role with real gusto. He has managed to dodge actually joining the president-elect’s administration staff, as he and former Republican leadership hopeful Vivek Ramaswamy will be leading a government efficiency team that’ll sit outside the realm of federal agencies, casting themselves as consultants rather than officials.

But while Musk has won big by betting on Trump so far, it’s unclear how long the headline-grabbing tech magnate can keep his seat at the table with someone who, if history is any guide, is disinclined to share the spotlight. For Musk, the stakes are high as the valuation of Tesla is now tied to his friendship with Trump — unmoored from the company’s fundamentals. So what are the odds that Musk makes it through the first 100 days?

Using historical data, we can assume Musk will last about six months, as this is his second turn on the Trump merry-go-round. Musk was a member of two advisory councils during the president-elect’s firm term: Trump’s transition team signed the Tesla CEO up in December 2016, despite Musk saying Trump was “not the right man for the job” during the campaign. Musk resigned from his advisory councils in June 2017 after Trump withdrew from the Paris Climate Agreement. “Am departing presidential councils. Climate change is real. Leaving Paris is not good for America or the world,” Musk said on what was then still called Twitter.

Trump is fully expected to withdraw from the Paris Agreement again, but of course the Musk of 2024 is not the Musk of 2017. The entrepreneur has moved further right in the intervening years, and he’s well aware that climate change denial is baked into the administration he’s about to not quite join. But it does give us a blueprint for how Musk approaches government work — and even if he does not end up resigning over some point of political contention, there’s always the risk that he could get booted. The first Trump administration was, relatively speaking, a revolving door. In its first year, it notched a 34% turnover rate. For context, Ronald Reagan had the next-highest turnover rate over the previous 40 years, and that was 17%.

So on the one hand we have a man with a history of resigning from the administration he’s re-joining, and on the other, a president with a higher-than-average penchant for firing officials. It is his catchphrase, after all.

Some journalists have already begun to speculate that Trump and Musk’s friendship may fall prey to a conflict of personalities. Both men enjoy the limelight, to put it mildly, and there are already some reports that Musk may be overstaying his welcome. At his first meeting with House Republicans after winning the election, Trump joked, “Elon won’t go home. I can’t get rid of him.” A friendly barb, possibly, it’s one Trump repeated at a black tie event at Mar-a-Lago the next day: “he happens to be a really good guy, you know he likes this place [Mar-a-Lago], I can’t get him outta here!”

But leaving aside personalities, there are a couple of practical considerations that could strain their alliance to the breaking point.

First and foremost, Musk will need to walk a geopolitical tightrope to stay in the good graces of both the US government and China, which is preparing to retaliate against Trump’s promised tariffs on Chinese goods. “China is very important for Tesla,” Felipe Muñoz, senior analyst at automotive market research firm JATO, told Power Corridor. According to Tesla’s most recent quarterly results, just over 22% of its revenue came from sales in China. A further 27% of its revenue came from “other international” sales, i.e., not the US or China, but given that Tesla exports many of its products from Shanghai, China holds sway over more than sales inside its own borders.

“Tesla is probably the non-Chinese carmaker most dependent on China. Not even the Germans are so exposed in terms of set volumes,” Muñoz said. “It’s a big market and this weird situation, this weird new reality we’re in where he is also playing politics, could definitely hurt his business in China.”

Musk has run up against hostility from the Chinese Communist Party before, and has overcome it pretty masterfully. Muñoz said that despite a huge shift in Chinese consumer behavior toward domestic brands, Tesla has managed to grow there while other foreign companies posted big drops in deliveries. But being so closely tied to Trump could tip the scales back against him. 

The bull case here is that Musk becomes the next Henry Kissinger, and manages to broker some diplomacy between Trump and China (to be completely fair to Musk, this is a flawed comparison: for all his faults, he has never once been complicit in the secret bombing of Cambodia). The bear case is that by attempting to play both sides, Musk squanders his social currency with Trump and/or becomes a geopolitical punching bag for China as it looks for ways to retaliate against US hawkishness.

Tesla is the jewel in Musk’s crown, closely followed by SpaceX which, given it relies on government contracts, is well-positioned to reap the benefits of him being closer to government budgets. However, one of Musk’s companies, X née Twitter, has a direct rival owned by Trump. Trump Media and Technology Group (TMTG), the company behind Trump’s social media platform Truth Social, is a loss-making enterprise with a $6 billion market cap. Trump founded Truth Social after the previous management at Twitter (now X) banned his account, which he had used as a direct PR wire to his brain during his first term in office. According to a CNN analysis, Trump’s daily tweet rate increased every year he occupied the White House, averaging 18 tweets or re-tweets per day. The longest break he took from tweeting while in office was in 2017, and it lasted 1.9 days. Musk unbanned Trump’s X account after buying the company and taking it private, and the once-and-future president has returned to tweeting, but not with quite the same ferocity. As time goes on, he may start to favor his own platform again, and posting his thoughts there exclusively could be a viable business decision. 

Again there is a bull case here, which is that X could merge with Truth Social given the platforms’ newfound similarities. “Whether by accident or design Musk has created not a new Twitter but a new Truth Social, albeit one that Trump isn’t a majority shareholder in,” Bruce Daisley, former head of X’s operations in Europe, the Middle East and Africa, told the Financial Times earlier this month.

Another point in Musk’s favor: Trump’s critics have accused him of architecting an oligarchy, whose utility will be in bankrolling candidates who support Trump’s political agenda, and Musk is a big node in that network. So it would be naive to think that Trump doesn’t need Musk at all anymore, but being an oligarch doesn’t mean you’re immune to court intrigue. Just ask Russia, where more than a handful have been jailed, exiled, or forced to surrender their riches. 

Musk has made a career out of larger-than-life brinksmanship, so he may just be able to stay in the game longer than his detractors give him credit for.