Abdelrahman
Overview
This week, the State Department omitted references to Tesla and Elon Musk in connection with a proposed $400 million deal for armored Cybertruck vehicles. The billionaire refuted claims that the government intended to invest such a significant amount in his electric cars. The State Department clarified that the inquiry occurred before Donald Trump’s presidency. However, this issue arises amid questions swirling regarding potential conflicts of interest concerning Musk’s prominent position in the White House and his extensive business interests.
A Tesla Cybertruck on display in California in December.
Essential Insights
According to the procurement forecast for the 2025 fiscal year, the State Department initially included $400 million designated for “Armored Tesla” vehicles, as reported by the independent outlet Drop Site News. However, the document was revised at 9:12 p.m. EST to indicate that the funds were simply allocated for “armored electric vehicles,” NPR reported.
This possible contract for armored electric vehicles, likely linked to Tesla’s Cybertruck model, represents the highest expenditure on the 320-item procurement list. Other potential contracts include $40 million designated for armored BMW X5 and X7 models.
Musk dismissed the reports regarding the $400 million contract for Tesla, calling it “fake news” and later adding that he was “pretty sure Tesla isn’t getting $400M. No one mentioned it to me, at least,” he stated.
A spokesperson for the State Department informed Forbes that there are “no current plans” to proceed with the $400 million contract for armored electric vehicles, highlighting that the procurement forecast “should have been a generic entry for ‘electric vehicle manufacturer’” rather than a specific mention of Tesla.
Last year, the Biden administration requested the State Department to “explore interest from private firms to manufacture armored electric vehicles.” According to the spokesperson, the agency only “received interest” from one company concerning the initiative.
Contextual Background
The scrutiny regarding the State Department and Cybertruck emerges as the line between Musk’s business dealings and his influential role in the Department of Government Efficiency, or “DOGE,” — an agency reviewing all federal expenditures — becomes increasingly blurred. Senator Adam Schiff, a Democrat from California, sent a letter to the White House on Monday, questioning whether Musk would “attempt to use his new role to protect his companies from federal oversight.” Over the last five years, Musk’s enterprises have secured $13 billion in federal contracts, primarily through his aerospace and communications company, SpaceX, the New York Times reports. However, Trump asserted during a Fox News interview that Musk, as a “special government employee,” isn’t “gaining anything” from his role in the White House.
Additional Notes
The Cybertruck, which debuted on the market in late 2023, has a starting price of $79,990. In 2024, Tesla sold approximately 39,000 of these innovative vehicles in the U.S., making it the top-selling electric pickup truck in the nation, although Cybertrucks accounted for roughly 6% of all Tesla sales domestically last year, Cox Automotive indicated. The unveiling of the Cybertruck in 2019 remains one of the most notable moments in Tesla’s history, highlighted by Musk’s assurance of its “robust” exterior, which famously faced scrutiny when a metal ball shattered its driver’s side window.
Market Response to Musk’s Political Connections
Tesla’s stock faced volatility early this month following concerns from analysts regarding the impact of Musk’s political affiliations on sales. Shares declined 19% between January 31 and Tuesday, amidst fears of consumer backlash. However, the stock regained momentum in recent trading sessions, rising 2.4% on Wednesday and 4% by midday Thursday. Analyst Dan Ives from Wedbush noted that Musk’s strong ties with Trump could potentially deter some customers from the Tesla brand, but he characterized these concerns as “manageable brand issues” for the company in the short term.
Valuation Insights
Musk ranks as the world’s wealthiest individual, with a net worth of $391 billion, according to recent assessments. His significant wealth derives from nearly a 13% share in Tesla and a 9% equity award currently under legal review, alongside major stakes in SpaceX, the AI company xAI, and the social media platform X.
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