The Trump administration has announced that it will not be proceeding with a $400 million contract to purchase armored Tesla vehicles. The decision comes after widespread public attention and scrutiny regarding the proposed deal, which was initially revealed in a federal contract document for the fiscal year 2025.
The contract, which was expected to be executed in September 2025, raised eyebrows due to Tesla CEO Elon Musk’s role in the government. Musk has been leading the Department of Government Efficiency, a unit tasked with reducing federal expenditures and addressing corruption. Critics expressed concerns about potential conflicts of interest as Musk oversees multiple companies that have received government contracts, including Tesla and SpaceX.
Following public outcry, the State Department confirmed that it has no plans to follow through with the purchase. Initially, the contract documentation specified Tesla as the supplier. However, after media reports surfaced, the wording was changed to ‘armored electric vehicles,’ removing any direct reference to Tesla.
The revelation of the contract led to significant debate, particularly after MSNBC’s Rachel Maddow highlighted the issue on her program. Musk responded on social media, refuting the claims and questioning the integrity of the reports.
According to a State Department spokesperson, the contract was initially conceived under the Biden administration as a request for private companies to develop armored electric vehicles for government use. At the time, Tesla was the sole company that showed interest in the project.
Normally, the next step in such a process would be a formal solicitation allowing multiple manufacturers to bid for the contract. However, the State Department has now put the entire process on hold. This leaves the future of armored electric vehicles in federal fleets uncertain.
Tesla’s Cybertruck, which features a stainless steel exterior and a military-style design, was speculated to be a likely candidate for the contract. Despite high interest, the vehicle has faced production challenges and quality complaints, including issues with rust and faulty accelerator pedals.
While Tesla’s contract has been shelved, other automakers are still set to receive smaller government contracts. For example, BMW is expected to supply around $40 million worth of armored SUVs to the federal government.
The cancellation of the Tesla contract highlights ongoing concerns about government spending, corporate influence, and transparency. As scrutiny over federal procurement processes continues, it remains to be seen how the government will proceed with its efforts to integrate electric vehicles into its fleet as other EV makers like NIO Inc. (NYSE: NIO) also explore avenues to make their models more affordable so that they can still be competitive on the U.S. market despite the 100% import tariff imposed on Chinese-made electric vehicles.
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