Trump's State Department pauses plan to buy $400M worth of armoured vehicles from Tesla

A $400 million plan for the US State Department to purchase armoured electric vehicles from Tesla has been placed on hold by the Trump administration, following reports that the deal was in progress. 

The decision comes as Tesla, owned by Elon Musk, had been the only company to express interest in the project when it was initially proposed during Joe Biden’s presidency.

Tesla’s federal ties under scrutiny

The State Department had been gathering information on potential suppliers since September 2024, with an official request for bids set for May 2025. However, the deal’s suspension means there are currently no plans to proceed with the contract, according to a spokesperson from the agency. While no formal contract had been awarded, Tesla was expected to be a frontrunner due to a lack of competition in the niche market for armoured electric vehicles.

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The proposed deal would have been one of Tesla’s largest government contracts of the year, further cementing Musk’s companies as major beneficiaries of federal funding. SpaceX, his aerospace firm, has received nearly $20 billion from the US government since 2008 for launching astronauts and satellites. Meanwhile, Tesla has already secured $41.9 million in federal payments, including supplying vehicles to US embassies.

A political shift alters the landscape

The suspension of the plan reflects the changing priorities of the Trump administration, which has been critical of electric vehicle mandates and has focused on downsizing federal agencies. Musk, once aligned with the Biden administration on clean energy policies, has since positioned himself closer to Trump’s circle, serving as an adviser on government reform. Despite this, it appears Tesla’s latest deal may not align with Trump’s current agenda.

Interestingly, after reports about Tesla’s potential involvement surfaced, the State Department altered its records, replacing Tesla’s name with a generic “electric vehicle manufacturer” entry. However, other entries in the same database still list specific companies, such as BMW, indicating that some purchases from known manufacturers remain on the table.

What’s next for the armoured EV contract?

At the moment, the armoured electric vehicle contract is in limbo, with no official bids being requested. Whether the project will be revived later, or if another manufacturer will step in, remains unclear. For now, Tesla’s federal business appears to have hit a speed bump, despite Musk’s growing influence in Washington.