The explosive fallout between President Donald Trump and Tesla CEO Elon Musk has sent shockwaves through the financial world, leaving investors in turmoil as they watch the value of Tesla stock plummet.
The public dispute, which began over the GOP’s "One Big Beautiful Bill" and escalated into personal attacks, has had a severe impact on Tesla’s market performance, triggering a 14% drop in Tesla shares on Thursday alone.
The dramatic decline in stock value marks the worst two-day performance for Tesla since November 2021, with shares continuing to slide in after-hours trading.
Tesla’s stock has been under significant pressure over the past few days, with a nearly 20% decline over the last five days and a year-to-date drop of more than 24.9%.
Musk’s criticism of Trump’s policies, particularly regarding the "One Big Beautiful Bill" and its proposed tax cuts, has caused a significant backlash in the market.
The fallout from the Musk-Trump relationship has not only hurt Tesla but has also raised concerns about the regulatory environment for Tesla under the Trump administration.
The feud between Trump and Musk erupted into public view when Musk criticized Trump’s tax reform bill, which is at the center of the president’s legislative agenda.
Musk called the bill a “disgusting abomination” due to its projected impact on the federal budget deficit, which the Congressional Budget Office estimates could reach $2.4 trillion over the next decade.
Musk’s comments came just after his departure from the Trump administration, where he had served in the Department of Government Efficiency (DOGE).
The fallout between the two men quickly escalated, with Musk continuing to criticize the bill, while Trump pushed back against the tech mogul’s views.
Trump, speaking at a White House meeting with German Chancellor Friedrich Merz, expressed his “disappointment” in Musk’s criticism of the bill and suggested that Musk was aware of the provisions in the bill that would cut subsidies for electric vehicles, which benefit Tesla.
Trump also pointed out that Musk should have known these changes were coming and accused him of acting out of "ingratitude."
Musk’s response on social media was swift and sharp. On X (formerly Twitter), Musk denied having seen the bill prior to its passage, reiterating his opposition to it.
He also took aim at Trump’s economic policies, writing that the president’s tariff policies could lead to a recession in the latter half of the year. Musk’s decision to publicly lash out at Trump only intensified the rift between them, culminating in a series of hostile exchanges on social media.
Trump retaliated by suggesting that a good way to reduce federal spending would be to cancel the government contracts and subsidies benefiting Musk’s companies, such as SpaceX and Tesla.
The impact of the Musk-Trump fallout on Tesla’s stock was immediate and severe. On Thursday, Tesla shares plunged by over 14%, erasing billions of dollars in market value.
The drop continued in after-hours trading, as the stock fell another 2.7%. This sharp decline marks the worst two-day performance for Tesla since November 2021, when the stock dropped 16.25% during a similar period of volatility.
The market’s response to the Musk-Trump feud underscores the deep concerns investors have about the future of Tesla, especially given the close relationship between Musk and Trump during the latter’s presidency.
During Trump’s tenure, Musk received significant support from the administration, including policies that benefited Tesla’s electric vehicle subsidies and the broader green energy market.
As such, the public breakdown in their relationship has raised questions about how the political environment will change for Tesla moving forward, particularly under a potential Trump administration in the future.
Tesla’s investors are concerned that the rift between Musk and Trump could alter the regulatory landscape in which Tesla operates. Musk has long been an advocate for deregulation and pro-business policies, and the Trump administration’s policies aligned with Musk’s vision for the future of the electric vehicle industry.
With Trump’s regulatory approach now potentially at risk due to the fallout, investors are left uncertain about what the future holds for Tesla and its market value.
Musk’s opposition to the "One Big Beautiful Bill" has been a central point of contention between him and Trump. The bill, which is Trump’s flagship piece of legislation in Congress, is designed to overhaul the tax system and reduce government spending.
While Trump has championed the bill as a necessary step toward fiscal responsibility, Musk has sharply criticized it for its potential to exacerbate the national deficit and for its provisions that eliminate subsidies for electric vehicles.
Musk’s criticism of the bill has become increasingly vocal, with the billionaire accusing the government of wasteful spending and calling the bill a "disgusting abomination."
Musk, who has long championed green energy and electric vehicles, sees the elimination of these subsidies as a setback for his company, Tesla, which relies heavily on the incentives for its electric cars.
Trump, however, has defended the bill, arguing that it is necessary to address the national deficit and ensure long-term economic stability. The disagreement over the bill, particularly over the future of electric vehicle incentives, has become the central issue in the escalating feud between the two men.
Trump’s response to Musk’s criticisms was pointed, accusing Musk of being ungrateful for the support the Trump administration had given him. "Without me, Trump would have lost the election," Musk posted on social media, further fueling the tension.
While the public feud between Trump and Musk is certainly personal, its implications for Tesla are more far-reaching. The conflict threatens to undermine Musk’s credibility as a businessman and political influencer, especially among conservative voters who were once strongly supportive of his efforts.
Musk’s decision to publicly criticize Trump—after benefiting from the former president’s policies—has left many investors questioning Musk’s judgment and his ability to navigate the complex relationship between business and politics.
Musk’s businesses, particularly Tesla, have long relied on favorable policies from the government. Tesla has benefited from tax credits and subsidies for electric vehicles, and Musk’s strong relationship with the Trump administration helped ensure that those incentives remained in place.
Now, with the relationship between Musk and Trump deteriorating, there are concerns that the favorable policies Musk has enjoyed in the past may be at risk, especially if Trump and Musk remain at odds.
The public nature of the feud has also drawn attention to the volatility of Musk’s leadership. Tesla’s stock has always been subject to fluctuations driven by Musk’s public statements and actions.
Whether it’s his tweets about production goals, his comments on Tesla’s future, or his involvement in political debates, Musk’s behavior has often been unpredictable, and investors have learned to be cautious as a result.
The current feud with Trump adds another layer of uncertainty to Tesla’s stock, making it even more difficult for investors to predict the company’s future performance.
For President Trump, the fallout with Musk could have significant political consequences. Musk has been a strong supporter of Trump’s 2024 presidential campaign, contributing millions of dollars to the cause and publicly praising the president for his economic policies.
However, Musk’s recent criticisms of Trump’s bill and his attacks on the president’s leadership could alienate some of Trump’s supporters, particularly those who view Musk as a key ally in advancing the cause of clean energy and innovation.
Musk’s ability to influence the political landscape, particularly among conservative voters and those sympathetic to Trump’s economic agenda, is significant.
If Musk’s criticisms continue, it could hurt Trump’s standing with some of his most loyal supporters. However, Trump’s supporters are also well aware of the president’s ability to weather such storms, and many are confident that he will continue to push forward with his policies despite the personal attacks from Musk.
Despite the growing tension between Musk and Trump, there is still a possibility that the two men could reconcile. Both Trump and Musk are known for their pragmatism and their ability to focus on the bigger picture, even when personal disagreements arise.
Musk has made significant contributions to the U.S. economy, and Trump has long valued his innovative approach to business and technology. While the feud has undoubtedly caused significant damage to their relationship, it is possible that they could find common ground in the future.
For now, however, the impact of the fallout between Trump and Musk is clear: Tesla’s stock is under major pressure, and investors are concerned about the future of the company under the current political climate.
As the dispute between Trump and Musk continues to unfold, the market will be watching closely to see how it impacts both men’s ability to achieve their respective goals.
The Trump-Musk fallout has sent shockwaves through the political and business worlds, with Tesla’s stock taking a significant hit as a result. The public feud between the two men has raised important questions about the future of Tesla and the regulatory environment in which it operates.
While Musk’s criticism of Trump’s policies has left investors uncertain about the company’s future, Trump’s leadership and commitment to his economic agenda remain strong.
Despite the personal nature of the conflict, Trump’s focus on achieving long-term success for the American economy remains steadfast, and he will continue to fight for policies that benefit the country.
As the situation evolves, it will be important to watch how the relationship between Trump and Musk develops and whether they can find a way to work together once again for the betterment of the country.
