Tesla Stock Sinks as Musk, Trump Clash \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Tesla shares plunged over 10% Thursday as tensions between Elon Musk and President Trump escalated into threats. Trump hinted at terminating federal subsidies to Tesla following Musk’s criticism of the administration’s budget bill. The feud has investors worried about Tesla’s robotaxi rollout and regulatory future.
Quick Looks
- Tesla stock dropped more than 10% Thursday afternoon.
- The decline erased over $100 billion in market value.
- Tensions escalated after Musk criticized Trump’s budget bill.
- Trump threatened to cut Musk’s federal subsidies and contracts.
- Musk claimed Trump wouldn’t have won the election without his help.
- Tesla’s recent growth was fueled by robotaxi expectations.
- Analysts fear Trump will delay autonomous vehicle initiatives.
- Shares had doubled post-election but reversed gains recently.
- Musk pledged in April to refocus on Tesla growth.
- Investors fear a politically motivated regulatory backlash.
Deep Look
Tesla’s stock took a nosedive on Thursday, plunging over 10% by afternoon trading and shedding more than $100 billion in market capitalization. The drop came as tensions between CEO Elon Musk and President Donald Trump spilled into the open, igniting investor fears that political retaliation could severely disrupt Tesla’s business model and future technologies.
The selloff followed a dramatic exchange of public jabs between Musk and Trump over the administration’s new budget bill. Musk publicly criticized the legislation, calling it a “disgusting abomination,” and said Trump wouldn’t have won re-election without his financial support and platform visibility. In response, Trump issued a thinly veiled threat via his social media network, Truth Social:
“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. I was always surprised that Biden didn’t do it!”
That statement, perceived as an official threat, triggered immediate investor anxiety.
$100 Billion Gone in Hours
The stock crash was swift. Within hours, Tesla’s market value plummeted by more than $100 billion, erasing much of the momentum the company had built since early April, when Musk announced the company’s accelerated push into autonomous vehicles.
At the time, Musk had said Tesla would begin testing a driverless robotaxi service in Austin, Texas as early as this month. The news sparked a massive rally in Tesla shares, with the company gaining more than $400 billion in valuation since the announcement. Investors saw the robotaxi service as a transformational shift, promising new revenue streams and global dominance in autonomous driving.
But those hopes are now clouded by political headwinds.
Fear of Federal Retaliation
Analysts say the feud introduces a new level of uncertainty. If Trump follows through on his threat to pull subsidies or increase regulatory scrutiny, Tesla’s near-term innovation goals—especially around autonomous vehicles—could face costly delays.
“There is a fear that Trump is not going to play Mr. Nice Guy when it comes to autonomous,” said Dan Ives, a senior analyst at Wedbush Securities. “The whole goal of robotaxis is to have them in 20 to 25 cities next year. If you start to heighten the regulatory environment, that could delay that path.”
Tesla is heavily dependent on favorable government policies. Its electric vehicle business has benefitted from federal tax credits, while its infrastructure expansion—including Supercharger stations and autonomous testing permissions—relies on a supportive regulatory climate. A sudden pivot in federal stance, particularly one motivated by political vengeance, could harm not only Tesla but the broader EV sector.
Political Power Meets Market Exposure
The escalating Musk–Trump feud showcases the fragile intersection of politics and business. Once close allies—Musk backed Trump heavily during the 2024 campaign, even joining him on stage and participating in Cabinet discussions—their relationship has since deteriorated amid policy disagreements.
Musk, who once led Trump’s “Department of Government Efficiency,” has returned to the private sector and immediately re-centered his attention on Tesla. But his break with Trump appears to have cost him more than just influence in Washington.
Ironically, Tesla shares doubled after Trump was re-elected, buoyed by expectations of business-friendly deregulation and Musk’s insider status. But with that access now revoked and replaced by direct threats, the stock has cratered.
The Robotaxi Vision Under Threat
Tesla’s future hinges on the success of its robotaxi initiative, which Musk has described as “the defining product of this generation.” The autonomous service, expected to roll out to select U.S. cities in 2025, promises to make Tesla a dominant player in mobility-as-a-service—a projected $2 trillion market by 2030.
But launching a driverless taxi fleet depends on complex, multi-agency approvals and testing protocols involving the Department of Transportation, NHTSA, and local municipalities. Any slowdown at the federal level—intentional or not—could delay launches and push back revenue targets.
Investors fear that if Trump wants to make a political point, he has the levers of power to do just that.
Investor Sentiment Turns Cautious
While some investors remain bullish on Tesla’s long-term fundamentals, the short-term sentiment has turned sharply negative. Trading volumes surged Thursday, and several analysts downgraded the stock citing “elevated political risk.”
“Tesla doesn’t operate in a vacuum,” said Sophie Lang of Crestview Capital. “Its valuation assumes a fairly aggressive pace of innovation, and politics now threaten that timeline.”
Musk tried to calm the waters with a late-day post, urging investors to “stay the course” and hinting at upcoming breakthroughs in AI and autonomy. But markets were unmoved.
Looking Ahead: Policy, Personality, and Price
The feud underscores a deeper tension between private-sector ambition and public-sector power. As business leaders like Musk become more politically involved, the fallout from personal clashes grows more severe and more immediate.
In April, Musk promised to “focus heavily” on Tesla after stepping back from government duties. That focus initially paid off, driving a sharp valuation spike. But now, his public rift with the president threatens to undo much of that progress—and leaves Tesla vulnerable at a crucial stage of development.
Whether Trump acts on his threats remains to be seen. For now, investors will watch not just Tesla’s quarterly earnings, but its CEO’s next post.
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