A longtime Elon Musk backer is done with Tesla stock and scaling back on SpaceX

The Republican Party suffered significant losses in the recent midterm elections, which also impacted one of its key supporters, Elon Musk. The two companies he owns—Tesla and SpaceX—experienced a sharp decline in their stock market values. Tesla's shares dropped by 3.3% on Wednesday, and the decline intensified to 10.77% on Thursday.

SpaceX’s shares fell 3.8% on the first day and another 9% on Thursday. Combined, the market value loss for the two companies is nearing $469 billion, or approximately €417 billion at the current exchange rate. On Wednesday, the depreciation amounted to €110 billion. With Elon Musk controlling 35% of SpaceX and 11% of Tesla, the value of his personal wealth is estimated to have lost around $189 billion (€170 billion).

Markets interpreted the election results as an increase in regulatory risks for Musk's business empire, a major backer of the Republican Party. Analysts believe that a Democratic-controlled Congress may lead to stricter oversight of key sectors, such as artificial intelligence, potentially complicating Musk's plans to integrate Tesla and SpaceX.

The entrepreneur's residence and Tesla's headquarters are in Texas, a state he made the center of his operations after relocating there in 2020. The new Democratic governor, Gina Hinojosa, has advocated for greater control over data centers, essential infrastructure for AI development. The billionaire's political involvement with Donald Trump and the Republican Party has also increased, with Musk donating nearly $450 million to Republican candidates, including $205 million to Texas campaigns.

After the election results, Musk ironically remarked on his social media platform X that his "space lasers for interfering with the election didn't work this time" and suggested that "data centers in space are starting to look pretty appealing." While other electric vehicle manufacturers, such as Rivian and Lucid, saw their stock prices rise amid hopes for more favorable energy transition measures from a Democratic majority, the political landscape could impact some of Musk's strategic projects, including the potential merger between Tesla and SpaceX.