Tesla shares experienced a dramatic sell-off on Thursday, plummeting by 14% as a bitter public feud erupted between CEO Elon Musk and former US President Donald Trump. The sharp decline wiped out an estimated $150 to $152 billion from Tesla’s market value in one of the worst trading days for the electric vehicle giant in recent months.
The swift and public escalation of tensions between the two influential figures sent shockwaves through the market, highlighting the significant risks posed by Musk’s political involvements to the electric car company.
The Clash Goes Public: From Policy to Personal Attacks
The dispute played out intensely throughout the day, primarily on their respective social media platforms, X (owned by Musk) and Truth Social (owned by Trump). What began as disagreements over policy quickly devolved into personal insults and direct threats.
The conflict intensified dramatically when President Trump reportedly threatened to cut off government contracts held by Musk’s various companies, most notably SpaceX. SpaceX holds contracts worth tens of billions of dollars with the U.S. government, including crucial missions for NASA. Musk responded defiantly to this threat, stating publicly, “Go ahead, make my day.”
What Sparked the High-Stakes Dispute?
Multiple points of contention appear to have ignited the public firestorm:
Spending Bill Criticism: The immediate trigger was Musk’s vocal opposition to a Trump-backed spending bill. Musk took to X, calling the bill a “disgusting abomination” loaded with “pork” that would irresponsibly increase the national debt.
Tariff Concerns: Musk also reiterated his criticism of Trump’s tariffs, predicting they would trigger an economic recession in the latter half of the year.
EV Tax Credits: Trump countered Musk’s criticism by suggesting his true unhappiness stemmed from the potential elimination of electric vehicle tax credits, a policy that has historically been vital for Tesla’s sales in the U.S. Musk denied this, stating he would accept EV/solar cuts if other spending (“pork”) was removed, noting the unfairness of leaving oil and gas subsidies untouched.
NASA Nomination: The two men also clashed over Trump’s decision to withdraw the nomination of Jared Isaacman, a known Musk ally, for a key leadership position at NASA.
Threats and Retaliation Fly
The exchange grew increasingly hostile. Trump hinted at using government power against Musk’s business empire, describing government contracts as the “lifeblood” of SpaceX.
Musk retaliated with significant counter-attacks. He dared Trump to cut funding and, at one point, even threatened to decommission the SpaceX Dragon spacecraft used by NASA (a threat he later walked back). Musk also called for Trump’s impeachment, suggested he might fund political challengers to Republicans, and even made an unsubstantiated public accusation linking Trump to Jeffrey Epstein – a claim the White House offered only “tepid pushback” against.
Investors Watch in Disbelief as Tesla Stock Plunges
The market reacted swiftly and negatively to the escalating feud. The 14%+ drop in Tesla’s stock price, trading under the ticker TSLA, sent shares to their lowest level since May, wiping away gains made earlier on hopes that Musk would refocus on the core business. The plunge also significantly impacted Musk’s personal fortune, knocking an estimated $8.73 billion off his net worth.
Analysts highlighted the severe investor fear sparked by the clash. Dan Ives of Wedbush Securities, a longtime observer of the company, called the situation “jaw dropping and a shock to the market.” A primary concern is the potential negative impact on Tesla’s regulatory environment, especially as the company seeks approval for ambitious projects like expanding its self-driving technology and launching robotaxis, plans heavily reliant on a favorable regulatory landscape. Ives noted the conflict “put a fly in the ointment of the Trump regulatory framework” and urged for the situation to be “calmed down.”
Individual investors voiced alarm online. Ross Gerber, an investor who had previously reduced his Tesla holdings due to concerns about Musk’s political activities, wrote, “Can someone please take the phone away from him,” adding, “Tesla is getting destroyed.” Stock traders who had bet against Tesla shares (“short sellers”) reportedly made billions from the day’s decline.
A History of Political Volatility for TSLA
Musk’s deep dive into politics has consistently been a source of volatility for Tesla investors. Shares surged in the previous year partly on hopes that his alliance with Trump would benefit the company. However, sentiment soured this year, as Musk’s political alignment and his role in controversial government spending cuts within the short-lived “Department of Government Efficiency” (Doge) became a “lightning rod,” generating backlash and negatively impacting sales, particularly in Europe.
Broader investor concerns about Musk’s focus, fueled by discussions around his record-breaking pay package and prior rumors that the board was seeking a new leader (which were denied), have also weighed on the stock. Despite a brief uplift last month following his pledge to step back from Dogecoin-related activities and formally leaving a government advisory role, Tesla is now back in the political crossfire.
Wider Repercussions and the Backstory
Beyond Tesla, the feud also had repercussions for other assets tied to Trump. Shares in Trump Media & Technology Group, the parent company of Truth Social, fell by 8%. Similarly, the meme cryptocurrency $Trump, backed by the former president, saw a 12% drop.
The dramatic shift is notable given their prior relationship. The two had formed a powerful, albeit unlikely, alliance, with Musk reportedly donating between $275 million and $290 million to Trump’s presidential campaign and serving for months as the head of the “Doge” initiative aimed at cutting government costs (claiming savings that were later disputed). Trump’s comment using the past tense – “Elon and I had a great relationship” – underscored the sudden breakdown.
As of the close of trading on Thursday, Tesla shares were down 25% since the start of the year, although they remained up 60% over the past 12 months. The intensity of the conflict suggests that an easy de-escalation may be difficult, and the feud’s impact on both men’s business interests and the political landscape is likely to continue dominating headlines.
References
- https://www.bbc.com/news/articles/cy902rv7q8do
- https://www.bbc.co.uk/news/articles/cy902rv7q8do
- https://www.bbc.com/news/articles/c5yg98rl717o
- https://www.bbc.com/news/articles/c3wd2215q08o
- https://www.theguardian.com/technology/2025/jun/05/tesla-share-drop-trump-musk-feud
