As Elon Musk’s DOGE chainsaws through federal agencies with budget and staff cuts, Tesla and SpaceX, cornerstones of Musk’s fabulous wealth, continue to benefit from public money. They probably wouldn’t have succeeded without it.
By Alan Ohnsman, Forbes Staff
Elon Musk, the South African-born billionaire overseeing President Trump’s massive and haphazard effort to hack down government overspending, is among the largest beneficiaries of federal government support ever. His empire was built on it.
In the past 15 years alone, Tesla, Musk’s $1.1 trillion company, and SpaceX, his $350 billion valuation company, have sucked in a stunning $30 billion in public dollars. Meanwhile, Musk’s personal wealth ballooned to the point of engorgement, swelling from $2 billion in 2012 to over $400 billion in December; he’s now worth $393 billion. Prior to 13 years ago, the world’s richest person wasn’t even a billionaire.
Republican presidential candidate Mitt Romney labeled Musk a “crony capitalist” in 2012, though long-term financial goodies his companies have received bring to mind another Republican moniker for someone living off public money. In the ensuing years, his companies have developed a symbiotic relationship with federal programs, turning him into more of a vampire. Those include:
- SpaceX rocket launches, satellite deliveries, ferrying astronauts and supplies to the International Space Station and Starlink services have won $22 billion in Defense Department and NASA contracts, according to President Gwynne Shotwell (though a review of publicly available data puts the tally at $20 billion).
- At least $4 billion of the $11.7 billion of regulatory credits Tesla has sold since 2008 were from sales to automakers needing to comply with U.S. Corporate Average Fuel Economy rules.
- A $465 million federal loan guarantee for Tesla in 2009 helped the then-struggling startup secure its first factory (a gift from Toyota).
- Tesla’s charging network qualified for at least $31 million in federal funds under a program Trump recently canceled.
- Tesla buyers have been the top beneficiaries of $7,500 tax credits for EVs, booking about $4 billion since the Obama era. Those too are likely going away under Trump.
- Tesla was briefly identified as being in the running for a $400 million contract to supply armored electric vehicles to the State Department before the agency suspended that plan.
As context for DOGE’s move fast and break government things effort — which has so far resulted in an impossible-to-verify claim of $55 billion in federal spending cuts and the firing of at least 200,000 government workers, including FAA staff and specialists overseeing nuclear weapons safety or trying to stop an avian flu pandemic, many of whom were hastily unfired — Musk’s decades-long reliance on government funds to grow and enrich his own companies is a bit dissonant. Norman Eisen, a senior fellow at the left-leaning Brookings Institution who’s involved in a suit filed on behalf of federal employees to block DOGE from carrying out actions they believe violate the Constitution, thinks it’s appalling.
“The staggering level of support Mr. Musk’s companies have received from the federal government over the years makes the damage that he’s doing to that government an act of rank hypocrisy,” Eisen told Forbes. “Even worse, looking forward, the continuing relationship between his commercial enterprises and the United States government creates a set of some of the most profound conflict questions we’ve seen in our history.”
Musk didn’t immediately respond to a request for comment on the matter. DOGE doesn’t have an identified public spokesperson and a White House spokesperson didn’t immediately respond to a request for comment.
Musk has honed an image as a risk-taking entrepreneur, arguably the most successful of the 21st century so far. Yet despite his ideas and efforts, his business empire wouldn’t have achieved its current scale without robust federal support.
Federal funds helped Tesla and SpaceX find their footing when they were fledgling, unproven startups over 15 years ago. In the case of Tesla, which narrowly avoided a bankruptcy filing in late 2008, an Advanced Technology Vehicle Manufacturing, or ATVM, loan from the Energy Department proved to be a lifeline. It helped it set up the company’s first factory faster and at a lower cost, owing to a lower interest rate, than if it had relied solely on private funds. That allowed production of its breakthrough Model S sedan to start on time in 2012, putting Tesla on course for future success.
And SpaceX, which had just begun putting its rockets into orbit in 2008 after multiple failures, wouldn’t have become NASA’s top provider of cargo and crew launches had the company not won a game-changing $1.6 billion contract that year. Both companies were shaky bets but the government’s gamble paid off.
Tesla is now the world’s most valuable automaker, with a $1.16 trillion market cap. SpaceX is estimated to be worth $350 billion and has been dubbed the world’s most valuable private startup. As a result, it’s highly likely that Musk’s vast wealth, which Forbes estimates at $393 billion based on his holdings in those companies, wouldn’t have been possible without the kind of federal programs DOGE and Trump are now eliminating.
For decades, reining in government spending and improving efficiency have been bipartisan concerns. And though there have been numerous initiatives to address them, the problem only seems to worsen with time. The big difference under Trump is that for the first time in U.S. history, the effort to find savings has been entirely outsourced to a billionaire entrepreneur.
Aside from Trump’s efforts to eliminate any future disbursements of grants and funding created by the Inflation Reduction Act and Bipartisan Infrastructure Law that Biden enacted–potentially including $4 billion in federal grants for California’s high-speed rail project–Musk’s DOGE team is slashing staff and funds across the board at federal agencies. And so far, there’s no clear indication that much thought has gone into who and what is being cut.
The effort has so far developed a reputation for taking the shoot first, ask questions later approach Musk deployed when he bought Twitter in 2022 and slashed 80% of its workers. In its first few weeks, aside from embarrassing, poorly thought-out reductions of staff cuts, DOGE has been criticized for halting NIH research grants that threaten to slow medical breakthroughs; eliminating most of the budget and staffing for USAID, ending food and medical supplies to developing nations; killing the Consumer Financial Protection Bureau; cutting IRS staff as tax season ramps up; eliminating seasonal staff at national parks; and potentially eliminating the Department of Education, including cuts to vital funds that go to the country’s poorest school districts.
But even Trump fans like Kash Patel, who’s likely to win Senate approval as the next director of the FBI, have pointed out how much Musk benefits from federal contracts. Referencing SpaceX’s Starlink service in a Fox News interview in December 2021, he said, “We’re all paying for it. This is why he’s so rich.”
While the billionaire has been the public face of DOGE and praised for his efforts by Trump, a federal attorney this week claimed Musk is not technically in charge of the cost-cutting project and has “no actual authority to make government decisions himself.” His status is as an unpaid, special government employee. But because Musk is a government contractor via SpaceX, the unfettered access DOGE has to databases at agencies including the Treasury Department, Social Security, IRS and the Defense Department are rattling nerves.
“How can they let this guy in the front door where all the contracts are when he is a contractor?” retired U.S. Army Lt. General Russel Honoré told Forbes. “I think that has to be illegal.”
Trump staffers have also said they’re relying on Musk to self-identify any potential conflicts. But that’s far from satisfactory for Eisen, a government ethics specialist in the Obama Administration and a co-counsel for the House Judiciary Committee in Trump’s first impeachment.
“We don’t know the answers, despite his proclamation of transparency, to questions like what precautions have been taken when he’s working on a particular matter, that he has no personal financial interest that’s related to it,” he said.
The implications of DOGE’s efforts are far from clear, though they’re resulting in painful reductions for many agencies that may soon be felt by larger numbers of Americans, especially lower-income people, as well as programs run by cities, states and schools that rely on federal funding. So far, Congress, which created all those programs and approved funding in the past, hasn’t intervened.
The irony that a billionaire who’s received billions of dollars from government programs like Musk, who also gave at least $200 million to help get Trump elected in 2024, is now slashing federal agencies with dubious legal authority is deeply troubling, said Eisen, a past ambassador to the Czech Republic.
“When you have magnates, including those who have benefited from government largesse in the past, who support a candidate to the tune of hundreds of millions of dollars, and then the candidate is successful and puts them in a position to make government decisions that raise these kinds of conflict questions,” he said. “We have a word for that: it’s oligarch. We’re seeing the establishment of an American oligarchy and that should be profoundly concerning to Americans.”
