Austin: Billionaire entrepreneur Elon Musk is facing fresh political and business challenges after spending at least $445 million to help Republicans retain control of Congress in the US midterm elections, only to see Democrats record major victories. The election setback has raised the prospect of congressional investigations into Musk’s business interests, government contracts and his earlier role in the Department of Government Efficiency (DOGE).
Musk’s political spending was among the largest financial bets made by an individual during the election campaign. However, the Republican losses have left him facing questions about whether his close association with the party and President Donald Trump could become a liability for his companies.
The consequences could be significant because Musk’s businesses have substantial financial relationships with the federal government. Democrats are preparing to use their newly strengthened position in Congress to examine those relationships, along with the activities of DOGE and decisions affecting Musk’s companies.
The Associated Press reported that Musk joked about his election spending on X, the social media platform he owns, as Republican losses mounted. “Guess my election-interfering space lasers didn’t work this time,” he wrote, adding a shrug emoji.
Musk’s political investments fail to deliver in Texas
Texas emerged as one of the most significant battlegrounds for Musk, who has based himself and several of his companies in the state. He reportedly spent at least $5 million trying to help Republican Governor Greg Abbott win re-election. Abbott lost to Democrat Gina Hinojosa, while Democrats also secured control of the Texas House and the US Senate.
Republican Attorney General Ken Paxton, who benefited from political spending linked to Musk, also lost his Senate race to Democrat James Talarico. The contest was another major setback for the billionaire, who had reportedly spent about $158 million supporting efforts connected to Paxton’s campaign.
The Democratic victories marked the party’s first statewide win in Texas in more than 30 years, according to the Associated Press. The candidates made Musk’s political influence and business dealings a central part of their campaign messaging.
They questioned the tax incentives and grants received by his companies, as well as his relationships with Republican officeholders. The argument was that public money and political decisions should not disproportionately benefit a billionaire with extensive business interests in the state.
“This era of open corruption is going to come to an end,” said Representative Gene Wu, chairman of the newly empowered Democratic Caucus in the Texas legislature.
Musk did not respond to messages seeking comment, the Associated Press reported.
Democrats use Musk’s reputation as a campaign issue
Musk’s public image appears to have been a challenge among voters beyond the Republican base. According to the AP Voter Poll, which surveyed more than 5,000 voters in Texas, slightly more than half had an unfavourable opinion of him.
His popularity was considerably stronger among MAGA Republicans, but the figures declined among Republicans who did not identify with the movement and were substantially lower among independent and Democratic voters.
Talarico and Hinojosa sought to appeal to these groups by framing the election as a contest between wealthy political donors and ordinary Texans. Musk’s involvement in Republican campaigns gave them a prominent example for that argument.
At his final election rally, Talarico accused Musk of using his wealth to influence Texas politics.
“Paxton is funded by one dude. Elon Musk wants our land. He wants our water. He wants our tax dollars. He wants his very own personal United States senator,” Talarico told supporters.
Hinojosa also criticised the financial benefits Musk’s companies receive from the state. She claimed that Musk had obtained a $1.7 billion property tax break in Texas, contrasting it with the property taxes paid by ordinary residents.
The Democratic campaign focused on affordability at a time when households were dealing with rising or persistent costs for essentials, including fuel, groceries, rent and mortgage payments. The median household income in Texas was about $85,000 a year, according to the report.
The argument appeared to resonate with voters concerned about the cost of living and the influence of wealthy donors. State Representative Christina Morales said Democrats believed voters were increasingly frustrated by economic pressures and less receptive to culture-war messaging.
Republicans question the effectiveness of Musk’s spending
Even within Republican ranks, there were questions about whether the scale of Musk’s political contributions had become counterproductive.
Outgoing Texas Representative Chip Roy said there was a limit to how much campaign spending could help a candidate. He suggested that repeated advertising had begun to irritate voters rather than persuade them.
“You’re reaching the upper bound of the benefit of any of these dollars,” Roy said in an interview. “People are so turned off by all of the ads, and all you’re doing is running the same ad every single time.”
Musk’s spending was intended to strengthen Republican candidates, but the results in Texas suggest that financial support alone could not overcome voter dissatisfaction or the opposition’s campaign strategy.
The election also exposed the risks of tying a candidate too closely to a controversial political donor. Democrats repeatedly highlighted Musk’s wealth, business interests and influence over public policy, making him a central target even though he was not on the ballot.
Tesla and SpaceX shares fall after election results
The political setback was followed by a sharp decline in the market value of Musk’s major businesses. Shares of Tesla and the valuation of SpaceX fell on Wednesday, even as the technology-heavy Nasdaq composite index rose.
Tesla’s share-price decline wiped out about $40 billion from the electric vehicle company’s market capitalisation, which stood at approximately $1.54 trillion. SpaceX also lost around $40 billion in market value, bringing its valuation to about $1.83 trillion.
Musk’s personal fortune fell by approximately $45 billion on Wednesday to $865.6 billion, according to Forbes. The figure could change as market prices fluctuate.
Investors appeared concerned about the possible consequences of the election for Musk’s businesses. Joe Mazzola, head trading and derivatives strategist at Charles Schwab, said worries about potential congressional investigations had contributed to the early decline in shares of Musk’s benchmark companies.
The market reaction reflects uncertainty about whether a Democratic-controlled Congress could create additional regulatory, political or commercial challenges for his businesses. However, the fall in valuations does not establish that investigations will necessarily result in financial penalties or changes to government contracts.
Michael Morris, a professor of leadership at Columbia Business School, said Musk’s confidence in his business strategies might have led him to believe that he could exert similar influence over politics.
He described politics as a different arena from business and suggested that Musk’s wealth and successful companies could make political involvement appear more like a game to him.
Musk’s DOGE record could face congressional scrutiny
Democrats have also indicated that they want to examine Musk’s previous role in the Trump administration. Last year, he headed DOGE, which moved through federal agencies and pursued cuts to government spending and the federal workforce.
The initiative led to large-scale reductions in federal jobs and changes to government services. Democrats have criticised the way the department operated and are seeking greater accountability for its decisions.
Representative James Walkinshaw, a Virginia Democrat, called for Musk to answer questions under oath. In an X post shortly before the election, he referred to Musk waving a chainsaw on stage and celebrating the dismissal of public servants.
The possibility of subpoenas and investigations could put Musk’s government-related business interests under greater scrutiny. His companies have major contracts and commercial relationships with federal agencies, making the relationship between his private businesses and government decisions a potential focus for lawmakers.
Democrats are also likely to examine the impact of Musk’s decisions involving Starlink, the satellite internet service operated by SpaceX. The service has played an important role in Ukraine during its war with Russia, and a recent controversy over restrictions on its use has drawn political attention.
The issue has added to concerns among Democrats about the influence of a private company and its owner over services that have strategic importance for the United States and its allies.
Texas grants and tax benefits may face fresh questions
Musk’s political difficulties could extend beyond Washington. His companies have received financial support through Texas state programmes, and an incoming Democratic administration could examine how those benefits were awarded.
In August, Musk’s companies received a $30 million grant through a state programme to build a semiconductor plant expected to create 3,000 jobs. The grant was one of several forms of financial support his businesses have received through state initiatives.
Musk has also successfully pushed the Texas legislature to pass laws favourable to his companies, according to reporting by The Texas Tribune. With Democrats gaining control of the state legislature and the governor’s office, those arrangements could face closer examination.
Democrats have criticised the tax breaks and grants, arguing that public resources should be scrutinised when they benefit companies owned by one of the world’s wealthiest individuals.
Morales said voters had rejected attempts to persuade them through culture-war arguments while remaining concerned about the cost of living.
“We’re not saying you don’t belong here,” she said. “Texans can’t be bought.”
A costly political gamble with wider consequences
Musk’s $445 million political investment has not delivered the Republican victories he sought. Instead, the election has strengthened the position of Democrats who have openly criticised his political influence and business relationships with government.
The consequences could extend beyond the immediate financial losses suffered by Tesla and SpaceX. Congressional investigations, scrutiny of federal contracts and questions about state-level incentives could create new challenges for Musk’s companies.
However, the election results do not automatically mean that government contracts will be cancelled, grants withdrawn or legal action initiated. Any such steps would depend on the findings of future reviews and the decisions of relevant authorities.
For Musk, the setback demonstrates the limits of financial influence in electoral politics. His wealth gave him the ability to support candidates and shape campaign messaging, but it could not guarantee victory. With Democrats preparing to scrutinise his business and government connections, the political gamble may carry consequences long after the midterm campaigns have ended.