Musk faces Democratic headwinds after Republican midterm losses and Texas flips blue
Billionaire Elon Musk faces political headwinds after spending nearly half a billion dollars backing Republicans who lost both chambers of Congress and the Texas governor's race. Democrats are expected to tighten scrutiny of his companies, data-centre projects and AI infrastructure, and may launch p
As Republicans suffered a landslide defeat and Texas elected its first Democratic governor in more than three decades, one of the biggest losers of the US midterms was not on the ballot: billionaire Elon Musk, according to The Standard.
The world's richest man spent nearly half a billion dollars to back Republican candidates and keep Texas red — a state home to his automaker Tesla, rocket-to-AI company SpaceX and a planned chipmaking venture between the two, the report said. Those bets unraveled as Democrats seized both chambers of Congress and Gina Hinojosa defeated Greg Abbott in the Texas governor's race, in a stinging rebuke to US President Donald Trump, a close Musk ally whom the billionaire helped elect, it said.
Musk, who urged his followers on X to vote Republican as recently as Tuesday, now faces a resurgent Democratic Party that he has spent years antagonizing, The Standard reported. The GOP's largest donor even threatened retaliation last month on his social media platform after a report said Democrats were considering probes into his companies if they won midterms, it said. Shares of SpaceX fell 3.8 per cent in premarket trading, while Tesla was down 3.6 per cent as both stocks lagged the broader market, according to the report.
One of Musk's biggest challenges could be slower approvals for the data centres crucial to tapping the US$28.5 trillion addressable market that SpaceX touted to investors ahead of its IPO, The Standard reported. Analysts and experts expect Democrats to tighten scrutiny of data-centre projects and push for construction moratoriums as local opposition grows over electricity costs, it said.
“A Democratic sweep of Congress would put pressure on tech and potentially bring regulatory pressure on everything AI and possibly slow down the wild, wild west growth figures that we see daily and often take for granted,” said Jake Dollarhide, CEO of Longbow Asset Management, as quoted by The Standard. “Musk was the Hail Mary for Republicans leading down to the wire. Unfortunately, his large infusion of cash to back red states could not overcome higher utility bills, prices at the grocery store and prices at the gas pump,” Dollarhide added.
Musk has also drawn scrutiny from Democratic lawmakers over restrictions on satellite communications used by Ukraine's military, mass federal job cuts under his watch at DOGE and the government contracts and subsidies flowing to his companies, according to The Standard. One of the lawmakers is Robert Garcia, the next House Oversight Committee chair, who had a blunt two-word message for Republicans and their allies on Tuesday evening: “Lawyer up,” the report said.
In Texas, Musk also might have to deal with tenuous relations between him and Hinojosa, The Standard reported. The incoming governor had sued to obtain emails between Musk and Abbott and accused the former governor of selling out the Lone Star state by offering favourable deals to the billionaire, it said. She has also dismissed Abbott's efforts to rein in data centres as political theatre, calling instead for an immediate halt to new projects until lawmakers strengthened protections for local communities, as well as an end to tax breaks, according to the report.