SpaceX and Starlink at Risk: Collateral Damage from Tesla’s Market Turmoil

Washington, June 7, 2025 — The public fallout between Elon Musk and President Donald Trump has whipped up Tesla’s stock, but the ripple effects now threaten Musk’s broader business empire, particularly SpaceX and its Starlink satellite division. As tensions escalate over a tax and spending bill, Trump’s threats to cut government contracts could jeopardize billions in funding for SpaceX, a linchpin of U.S. space exploration, and Starlink, a key player in global internet connectivity.

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Contracts Under Threat

SpaceX, a cornerstone of NASA’s space program, relies heavily on federal contracts, with approximately $22 billion in agreements at stake, including those for ferrying astronauts to the International Space Station (ISS) via its Dragon spacecraft. The company’s Starlink division, which provides satellite internet to millions worldwide, has secured deals with agencies like the Federal Aviation Administration and the Pentagon, with a potential $2.4 billion contract to upgrade air traffic control. Recent remarks by Trump, suggesting the termination of "Elon's governmental subsidies and contracts," have raised concerns about the stability of these agreements.

Musk's criticism of Trump's tax bill, which would end electric vehicle incentives, sparked the feud and escalated the situation. Musk briefly threatened to decommission the Dragon spacecraft, a move that would leave NASA reliant on Russian Soyuz rockets for ISS access, before retracting the statement. Analysts warn that any disruption to SpaceX’s contracts could delay U.S. space missions, including plans for Mars exploration and missile defense systems.

Starlink’s growing federal footprint, including its use at government facilities, faces similar risks. The service’s role in military communications, notably through a $1.8 billion classified contract, underscores its strategic importance. However, Trump’s threat to sever ties could halt these integrations, leaving agencies scrambling for alternatives.

Did You Know?
SpaceX’s Dragon spacecraft is currently the only U.S. vehicle capable of transporting astronauts to the ISS, a role it assumed after Boeing’s Starliner faced technical delays.

Broader Implications for Musk’s Empire

The Musk-Trump rift, once a close alliance bolstered by Musk’s $275 million support for Trump’s 2024 campaign, now endangers SpaceX’s dominance in the space industry and Starlink’s expansion in global telecommunications. Unlike Tesla, which faces consumer backlash and competition from Chinese EV makers, Starlink’s 7,000-satellite constellation gives it a competitive edge, but its reliance on government contracts makes it vulnerable.

Critics, including former NASA Deputy Administrator Lori Garver, argue that Musk’s threat to decommission Dragon is “untenable” and could endanger astronauts, while canceling SpaceX contracts may not be legally feasible. Meanwhile, Starlink’s international deals, such as a recent 10-year license in Lesotho, are considered strategic moves to curry favor with the Trump administration amid tariff negotiations, raising ethical concerns.

The feud’s impact extends beyond U.S. borders. Starlink’s role in Ukraine’s defense, providing critical communications since 2022, could face scrutiny if Musk’s reliability as a federal partner is questioned. Competitors like Amazon’s Project Kuiper and Eutelsat’s OneWeb are positioning to challenge Starlink, potentially capitalizing on any contract losses.

Satellite Network Analysis

SpaceX’s Starlink operates a constellation of over 7,000 low-earth orbit satellites, providing internet speeds up to 150 Mbps, far surpassing competitors. Its integration into FAA systems could reduce latency in air traffic control communications by up to 30%, but reliance on a single provider raises risks of vendor lock-in.

The ongoing Musk-Trump dispute, while potentially theatrical, poses real risks to SpaceX and Starlink’s government-backed operations. The future of U.S. space and internet infrastructure is at stake as both sides navigate this high-stakes fallout.