Tesla’s $400-million deal with U.S. State Department put on hold

The U.S. State Department has halted negotiations with Tesla over a potential $400 million contract for armored electric vehicles, following concerns over a possible conflict of interest involving CEO Elon Musk. The Trump administration made the decision after reports surfaced highlighting the deal, leading to Tesla’s removal from official procurement documents.

Procurement changes

Initially, the State Department’s procurement list for 2025 included a $400 million contract specifically naming Tesla. However, following media scrutiny, the department released a revised document referring only to "armored electric vehicles" without naming the automaker. According to a report from the New York Times, the State Department confirmed Thursday that, "The solicitation is on hold and there are no current plans to issue it."

The original procurement document did not specify which Tesla models would be supplied, but the Cybertruck, with its stainless-steel body and futuristic design, appeared to be the most likely candidate. If the deal had moved forward, it would have marked one of the largest government contracts of the year, further cementing Tesla’s position as a key supplier of government-funded vehicles.

Musk’s Role

Elon Musk’s dual role as Tesla’s CEO and a key advisor to President Trump has raised ethical concerns. The prospect of his company receiving a major government contract while he maintains direct influence over policy decisions sparked discussions over potential conflicts of interest.

Tesla is no stranger to federal funding. The company has already received $41.9 million from the U.S. government, including payments for vehicles supplied to U.S. embassies. Musk’s other venture, SpaceX, has been a significant recipient of government contracts as well, securing nearly $20 billion since 2008 for launching astronauts and satellites into space.

Musk himself seemed to downplay the situation, writing on X (formerly Twitter), “I’m pretty sure Tesla isn’t getting $400M. No one mentioned it to me, at least.”

While Tesla’s involvement in the deal is now uncertain, the State Department’s budget spreadsheet continues to allocate funds for armored electric vehicles. The department’s spokesperson clarified that no contracts have been "awarded to Tesla or any other vehicle manufacturer to produce armored electric vehicles for the Department of State."

For now, the State Department’s plans for securing armored electric vehicles remain in limbo, leaving open the question of whether another automaker will step in — or if Tesla may yet return to the negotiating table under a different administration.