The escalating feud between President Donald Trump and Tesla CEO Elon Musk has sent shockwaves through both political and financial arenas. Once allies, their relationship has deteriorated rapidly, leading to significant implications for Tesla’s stock and the broader electric vehicle (EV) market.
Tesla finds itself at the center of a high-stakes political and financial drama following a public fallout between former President Donald Trump and CEO Elon Musk. What began as a show of support has escalated into a personal and professional feud, sending ripples across Wall Street and threatening Tesla’s standing in both the electric vehicle market and federal contract space.
From Ally to Adversary: The Trump–Musk Rift
Earlier this year, Donald Trump publicly purchased a red Tesla Model S in a symbolic gesture backing Musk amid criticism from progressive circles. The move was widely interpreted as a sign of solidarity between two powerful and often controversial figures. However, their alliance quickly unraveled after Musk openly criticized Trump’s landmark “One Big Beautiful Bill,” calling it a fiscally irresponsible package and going as far as suggesting grounds for impeachment.
In retaliation, Trump accused Musk of suffering from “Trump Derangement Syndrome” and declared his intention to cut ties. According to reports from The New York Post and People Magazine, Trump is now considering selling or even giving away the Tesla he once proudly showcased—symbolizing a complete break from his earlier endorsement.
Stock Market Whiplash: Tesla Shares Take a Hit
The highly publicized dispute has had immediate consequences on Tesla’s market valuation. Following Trump’s disavowal and growing investor anxiety, Tesla’s shares plummeted by more than 14% in a single trading session, wiping out approximately $153 billion in market capitalization. Since Musk’s departure from his government advisory role at the Department of Government Efficiency (DOGE), Tesla has lost nearly $200 billion in value, falling below the trillion-dollar mark.
Market analysts attribute this steep decline to the breakdown of what was perceived as a mutually beneficial relationship. With Trump now distancing himself, Tesla’s political leverage may be significantly weakened, especially with a potential return to the White House still looming in the 2026 election cycle.
Regulatory and Operational Risks Mount
Beyond market volatility, Tesla now faces growing regulatory and operational risks. Trump’s inner circle has hinted at reviewing or even revoking federal contracts associated with Musk’s various ventures, including SpaceX and Starlink. This could disrupt key infrastructure projects and future government partnerships.
At the same time, Tesla’s global supply chain—especially its ties to Chinese manufacturers—poses an added vulnerability, given the current geopolitical climate and Washington’s push for supply chain decoupling from Beijing.
Mixed Outlook: Innovation vs. Instability
Despite the turmoil, Tesla continues to press forward with its innovation agenda. The much-anticipated launch of its autonomous robotaxi fleet in Austin could serve as a catalyst for a rebound, but expectations are high and scrutiny even higher.
Tesla’s stock has stabilized slightly, hovering around $295 per share as of the last close. However, analysts remain cautious. The loss of bipartisan support, potential federal pullbacks, and an increasingly unpredictable political environment could hinder the company’s long-term growth trajectory.
A Cautionary Tale for Corporate-Political Ties
Tesla’s current situation underscores the risks that arise when corporate leaders and political figures become too closely aligned. As Musk navigates this public fallout, he faces the dual challenge of restoring investor confidence while steering clear of further political entanglements.
Whether Tesla will soar again or face further setbacks may depend less on technological breakthroughs and more on how skillfully it can manage its increasingly complex political and regulatory landscape.
