About $474 million spent on Republican candidates in Texas elections did not secure the result Elon Musk had expected.
Democrats James Tallarico and Gina Hinojosa defeated the Republican candidates backed by the billionaire, creating new uncertainty around his political and economic interests in the state.
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The result is a blow to Musk, who has located a significant part of his business operations in Texas. Tesla’s headquarters and SpaceX’s main operations are now in the state, while his companies’ projects depend heavily on permits, subsidies and agreements with public agencies.
Analyses by U.S. media suggest that the loss of Republican allies could expose Musk to a new political climate in which Democrats have more influence over decisions related to his investments.
Investments by Musk’s companies in Texas
Texas has become one of the main hubs for Elon Musk’s companies. Tesla is headquartered there, while SpaceX launches its rockets from Cameron County.
Bastrop County is home to Starlink satellite production, while Terafab—a large-scale complex for producing microchips for Tesla and SpaceX—is being developed in Grimes County.
The project involves billions of dollars in investment and the creation of around 3,000 new jobs. The companies have also received financial support from the state for the investment.
When he unveiled Terafab, Musk described it as one of the most ambitious initiatives in chip manufacturing. Texas was also chosen because of the favorable business conditions it offers.
The Democrats’ victory, however, could change the relationship between Musk’s companies and state authorities. Gina Hinojosa, who won the gubernatorial race, made the need for stricter oversight of data centers—and their impact on water and electricity consumption—a central campaign issue.
Hinojosa had proposed a moratorium on building new data centers until regulations could be drawn up to protect consumers and limit household costs.
As governor, she would be able to influence this process directly, including through appointments to state commissions that make decisions on major projects.
Uncertainty also surrounds the project in Boca Chica
Musk’s plans could also be affected by developments involving Boca Chica State Park, located near SpaceX’s Starbase.
The Texas Parks and Wildlife Commission had considered selling around 5,260 acres of land, with SpaceX mentioned as a potential buyer. The matter, however, was not included on the agenda for the November meeting.
With the change in political leadership, the prospect of such an agreement could diminish. The Texas governor influences the commission’s composition, as its members are appointed by the governor.
Starbase is in southern Texas, near the border with Mexico. SpaceX established the base in 2014 near Boca Chica Beach, and it is where the company launches its Starship rockets, which Musk hopes to use for trips to Mars.
On May 3, 2025, the area was officially declared a city after a vote in which 212 people voted in favor and six against. Most of the voters were SpaceX employees or people affiliated with the company. Bobby Pinden, the company’s vice president, was elected mayor unopposed.
Starbase had around 500 residents and covered an area of approximately 3.9 square kilometers. Its new status gave the city authority over construction, the issuing of permits and the enforcement of local regulations.
Why Musk moved to Texas
Musk’s move to Texas began in late 2020, when he announced that he was leaving California and criticized what he said was Silicon Valley’s growing influence.
One of Texas’s main advantages for businesses and high-income individuals is that it has no state personal income tax.
In 2021, Tesla moved its headquarters from Palo Alto to Austin, which is also home to one of the company’s largest factories in the United States. In July 2024, SpaceX made the same move, while Musk also announced that X’s headquarters would relocate to Austin.
Alongside the economic benefits, Texas offered his companies a more favorable political and legal environment.
After a Delaware court overturned Musk’s $56 billion pay package, Tesla moved its corporate headquarters to Texas.
In May 2025, Governor Greg Abbott signed a law allowing companies to set a minimum shareholder participation threshold for bringing certain lawsuits. Tesla adopted the provision immediately.
State tax breaks and grants under scrutiny
During the campaign, Democrats questioned the relationship between Musk and the Abbott administration, alleging that the billionaire’s companies had received tax breaks and grants from the state.
A lawsuit filed by Gina Hinojosa’s campaign said Terafab had received around $1.7 billion in tax breaks, while SpaceX had received more than $54 million in state grants. Starlink had received around $110 million in grants after broadband internet rules were approved.
Hinojosa also sought the release of more than 1,000 pages of communications between Abbott and Musk. The governor opposed the request, describing the communications as highly personal and intrusive. A court initially sided with the request, but the decision was later overturned by an appeals court.
Terafab is among Musk’s largest planned investments in Texas. According to published figures, the first phase alone calls for a $55 billion investment, while the total could reach $119 billion.
Companies’ value falls after the election
The political loss was accompanied by a decline in the share values of companies run by Musk.
Figures cited by Anadolu Agency showed that the initial drop in Tesla and SpaceX shares reduced the billionaire’s estimated wealth by more than $60 billion.
Later estimates by Forbes put the loss at around $34.5 billion, bringing Musk’s wealth to $867.2 billion.
Tesla shares closed the day at $385.19, down 3.3%, while SpaceX shares fell 3.8% to $135.92.
According to estimates by FourWeekMBA, the two companies lost a combined $125.8 billion in market capitalization in a single day.
Musk had spent around $474 million on Republican candidates during this election cycle. Forbes analysis showed that of the 106 candidates he backed, 44 lost, 18 won in districts considered safe for Republicans, and 44 races remained undecided as of Wednesday.
Democrats warn of investigations into Musk and DOGE
The consequences for Musk could extend beyond Texas, as he may also face greater scrutiny from the U.S. Congress.
The Democrats’ victory in the House of Representatives is expected to give lawmakers from the party leadership of committees with the authority to demand documents and testimony through subpoenas.
Robert Garcia, who is expected to lead the Oversight Committee, reacted immediately to the results with the message, “Lawyers up.” The statement signaled the start of a new period of scrutiny of the administration’s activities and its ties to big business.
Attention is expected to focus on decisions made by the Department of Government Efficiency (DOGE), where Musk played a significant role; SpaceX’s federal contracts; his companies’ dealings with regulators; and Starlink’s possible role in the war in Ukraine.
As of October 1, SpaceX had secured federal contracts worth $6.78 billion, compared with $3.8 billion for all of 2024.
However, these investigations are politically stated objectives and do not constitute evidence that any laws have been violated.
Tallarico: Elections should not be bought by billionaires
The influence of big money in politics was one of the central themes of Democrat James Tallarico’s campaign.
He publicly criticized the amount Musk spent on his opponent and said that no single individual, no matter how great their wealth, should be able to determine the outcome of an election.
In his victory speech, Tallarico described the race as a contest between David and Goliath and called for big money to be removed from politics.
The debate is also connected to a 2010 U.S. Supreme Court decision that allowed independent political spending by corporations, unions and other groups.
Opponents of this system warn that concentrating political funding in the hands of a limited number of donors could lead to conflicts of interest, particularly when those individuals also have major contracts and economic interests with the government.
Supporters of the model, on the other hand, argue that political spending is protected by freedom of expression and that Democrats also benefit from contributions by major donors.
For Musk, the next challenge is not limited to the defeat of the candidates he funded. It also concerns the relationship he will build with Texas’s new leaders. His projects have not been canceled, but the political shift could bring more scrutiny, regulations and uncertainty for his multibillion-dollar investments.
