However, Musk and Trump had a major falling out earlier this year, with the two trading personal insults and criticism on social media. Much of the conflict arose from Musk's criticism of Trump's "big beautiful bill," which he claimed undermined his efforts to cut government spending under the Department of Government Efficiency.

The "big beautiful bill," passed in July, would end a government green credit scheme for electric vehicle manufacturers, depriving Tesla of a major source of revenue.

Trump has threatened to cancel Musk's federal contracts, particularly for SpaceX. However, an audit found that most of the contracts are for key functions within the Department of Defense and the National Aeronautics and Space Administration.

Musk’s political ambitions a point of contention for Tesla shareholders

Any easing of Musk’s political ambitions is expected to provide some relief to Tesla shareholders, who have grown increasingly concerned that Musk’s work with the government is distracting him from his duties at the electric car maker. Tesla shares have risen since Musk stepped down as head of the DOGE earlier this year.

Musk’s announcement of the American Party spooked Tesla shares in July. His role at the electric car maker has come under increasing scrutiny this year, especially as Tesla faces a prolonged sales decline while the company’s autonomous driving and robotics ventures have delivered mediocre results so far.

Musk has largely touted robotaxis and robotics as representing the next big growth phase for Tesla.

However, Tesla recently approved a $29 billion pay package for Musk.

Tesla shares were seen paring some of their post-market losses following the WSJ report. Tesla traded down 0.7% after initially falling 1.5% in after-market trading, 24-hour trading data from Robinhood showed.