Tesla shares suffered a dramatic fall on Thursday, losing more than 14% of their value and wiping out approximately $150 billion in market capitalization, as a bitter public feud between CEO Elon Musk and U.S. President Donald Trump rattled investors.
The dispute centers on Trump’s sweeping new budget bill, which proposes eliminating the popular $7,500 federal tax credit for electric vehicle buyers, a move Musk argues would deal a significant blow to Tesla’s sales. Musk took to his social media platform X, calling the legislation a “disgusting abomination” and urging lawmakers to reject it. Trump, in turn, accused Musk of only objecting to the bill because it threatened his business interests, and suggested he might end government contracts and subsidies for Tesla and Musk’s other ventures, including SpaceX.
“Look, Elon and I had a wonderful rapport. I’m not sure if that will continue,” Trump told reporters, expressing disappointment over Musk’s public criticism. Musk fired back, claiming Trump was “ungrateful” and asserting that his support had been crucial to Trump’s 2024 election victory.
The clash unnerved Wall Street. Tesla’s stock plummeted by 14% in a single day, the largest one-day drop on record for the company, bringing its market value below the $1 trillion threshold. Investors, who once bet heavily on Tesla due to Musk’s close relationship with Trump, are now worried that the fallout could lead to regulatory hurdles and the loss of lucrative government deals.
“The budget bill includes unfavorable provisions for Tesla, particularly the termination of EV credits. Moreover, his fallout with Trump poses risks for Tesla and Musk’s other ventures,” commented Ellerek, manager at Ent Capital Management. Analysts at J.P. Morgan estimate Tesla could lose $1.2 billion in annual profits if the EV credit is scrapped, not to mention potential losses from other regulatory changes.
After Thursday’s rout, Tesla shares rebounded slightly, rising over 5% in premarket trading Friday. However, the broader outlook remains uncertain as the political drama continues to unfold. “This conflict does not alter our optimistic outlook on Tesla and its autonomous capabilities, but it certainly complicates the regulatory landscape under Trump moving forward,” said Dan Ives, an analyst at Wedbush Securities.
The feud has left Tesla investors and industry watchers on edge. The company, still the world’s most valuable automaker, faces a more challenging environment as political and regulatory risks mount. Whether Musk and Trump can mend their relationship, or whether Tesla will have to navigate a new era without the benefit of federal incentives, remains to be seen.
