Elon Musk Counts the Cost of His ‘government Efficiency’ Blitz

Musk this week formally abandoned his role as the head of the so-called Department of Government Efficiency (Doge), which has failed to find even a fraction of the $2tn in savings he originally pledged.

After Doge was announced, a majority of American voters believed Musk would use the body to “enrich himself and undermine his business rivals”, according to a survey, instead of streamlining the government.

Early moves by the Trump administration suggested Musk might get value for money. A lawsuit brought by the Biden administration against SpaceX over its hiring practices was dropped in February, and regulators probing his brain-implant company Neuralink were dismissed.

Musk’s satellite internet business Starlink was touted by commerce secretary Howard Lutnick as a potential beneficiary of a $42bn rural broadband scheme. An executive order calling for the establishment of a multibillion-dollar Iron Dome defence system in the US looked set to benefit Musk, due to SpaceX’s dominance in rocket launches.

The gutting of various watchdogs across government also benefited Musk’s businesses, while a number of large US companies rushed to ink deals with Starlink or increase their advertising spending on X.

But while Doge took a scythe to various causes loathed by Musk, most notably international aid spending and government contracts purportedly linked to diversity initiatives or “woke” research, it also caused severe blowback to the billionaire’s businesses, particularly Tesla.

Some of the brand damage to Tesla, until recently Musk’s primary source of wealth, could be permanent. “Eighty per cent of Teslas in the US were sold in blue zip codes,” a former senior employee said. “Obviously that constituency has been deeply offended.”

Far from being laser-focused on eliminating waste, Musk’s foray into government was a “revenge tour” against a bureaucracy the billionaire had come to see as the enemy of innovation, a former senior colleague of Musk’s said, highlighting the entrepreneur’s frustration with Covid-19 regulations in California, his perceived snub by the Biden administration and his anger over his daughter’s gender transition.

Trump’s AI and crypto tsar David Sacks, an influential political voice in the tech world, “whipped [Musk] up into a very, very far-right kind of mindset”, the person added, to the extent that was “going to help this administration in crushing the ‘woke’ agenda’.”

“Trump, I think, was very savvy and allowed Doge to kind of take all those headlines for a traditional political scapegoat,” said Sahil Lavingia, head of a commerce start-up who worked for Doge until earlier this month. Musk, he added, might also have been keen to take credit for the gutting of USAID and other moves but ultimately garnered unwanted attention.
“If you were truly evil, [you] would just be more quiet,” said Lavignia, who joined the initiative in order to streamline processes within government. “You would do the evil stuff quietly.”