Musk faces scrutiny after failed US$474m political gamble

Elon Musk's record US$474 million political spending bet failed as Democrats recaptured the US Congress in Tuesday's midterm elections, leaving his business empire facing heightened scrutiny over government contracts and China ties. Markets reacted swiftly, with SpaceX shares falling 4 per cent and Tesla tumbling 5 per cent. Democrats are expected to examine SpaceX's defence contracts, including a US$6.45 billion US Space Force deal, and potential conflicts of interest involving Tesla's reliance on China. Tesla's Shanghai Gigafactory produced over half of global vehicle deliveries last year, and Musk's proposed Tesla-SpaceX merger could face security reviews over Chinese supply chain exposure. Analysts say Tesla's China operations will likely remain resilient despite political pressure, though Musk's role as a US-China intermediary has diminished following last year's trade truce. While Trump retains veto power for two years, congressional oversight may push Musk to lower his political profile.