Musk issues clarification as Tesla & SpaceX stocks fall over Democrat action fears

Elon Musk has reassured investors about the reliance of Tesla and SpaceX on government contracts, stating that Tesla has no such contracts and SpaceX's government revenue is expected to be less than 10% of its total revenue this quarter. The billionaire's clarification came as shares of his companies fell following Democrats' victory in the US mid-term elections.

Musk defended SpaceX's government contracts, claiming the company offers both the "best product" and the "lowest price". He also indicated that government revenue for SpaceX would decrease to less than 5% of its total revenue within a year. Musk's remarks followed a significant drop in Tesla and SpaceX stocks after Democrats won control of both chambers of Congress in the US mid-term elections, with Tesla shares falling around 5% and SpaceX shares dropping 6.9% in early trading.

The concerns stem from potential increased scrutiny of Musk's businesses, including government contracts, AI operations, and the proposed merger between Tesla and SpaceX. Democrats' victories in key races in Texas, where both companies have major operations, have added to the uncertainty surrounding their future business plans. In response to a suggestion to cancel federal contracts, Musk replied in jest, affirming that Tesla has no government contracts and that SpaceX's contracts are both the best product and the lowest price, with government revenue for SpaceX expected to fall further in the future.