Tesla’s stock sinks more than 14% as rift between Musk and Trump escalates
Tesla Inc.’s shares have plummeted more than 14% amid escalating tensions between CEO Elon Musk and former President Donald Trump, erasing nearly $200 billion in market value since Musk’s departure from the Department of Government Efficiency (DOGE). This selloff pushed Tesla’s market capitalization below the $1 trillion mark for the first time since early May.
Last week, optimism had grown among investors following Musk’s return to Tesla’s headquarters and his pledge to remain at the company for the foreseeable future. However, that enthusiasm was abruptly tempered when Musk publicly criticized Trump on X, the social media platform he owns, claiming the former president would have lost the election without his support. Musk also took aim at a contentious Republican budget bill currently under Senate consideration, cryptically referencing the legislation as “Kill Bill” and making an allusion to the “Epstein files.”
Tesla’s stock initially received a lift when Musk announced his exit from Washington a week ago, but more often than not, the stock has since experienced declines. The recent public fallout with Trump over the proposed $2.4 trillion tax and spending bill — which includes the phasing out of electric vehicle (EV) tax credits vital to Tesla’s profitability — has added to investor unease.
CFRA analyst Garrett Nelson noted that Musk is “genuinely upset” over the projected deficits and certain elements of the bill, especially after his significant political donations and efforts to curb the deficit through DOGE. Nelson described Thursday’s selloff as a combination of an “unjustified” rally after Tesla’s first-quarter earnings report, ongoing losses in international market share, and concerns that the upcoming robotaxi launch in Austin, Texas, may underperform expectations.
Tesla plans to launch a pilot robotaxi program next week in Austin, with Musk promising rapid expansion into more U.S. cities by year-end. While this initiative could act as a catalyst for the stock, it also introduces risks should the rollout face setbacks.
Musk has long intertwined his public persona with political influence, having contributed around $291 million toward Trump’s election and supporting other Republican campaigns. Tesla’s shares reached an all-time high of $479.86 in December 2024, fueled by optimism surrounding the Trump administration’s potential benefits to the company’s ambitions in autonomous vehicles and robotics. Despite Musk’s vocal opposition to EV tax credits, Tesla continues to rely on them for its financial performance.
Currently, Tesla’s stock is down approximately 41% from its December peak and about 30% year-to-date, underperforming the broader S&P 500 index, which has gained around 1% during the same period. Investors now watch closely as Tesla navigates political tensions, regulatory changes, and ambitious product launches that could define its near-term future.
