- Tesla stock fell 5% as Musk publicly clashed with Trump over his tax bill and EV subsidy cuts.
- Musk’s exit from the White House and harsh rhetoric have fueled investor unease and market volatility.
- Analysts warn Tesla could lose over $3 billion in profits if the proposed legislation passes.
Tesla’s stock took a hit Thursday, sliding over 5% as Elon Musk ramped up his attacks on President Trump’s signature tax legislation. The sudden drop, despite no company-specific news, has traders buzzing that Musk’s public spat with the president could be souring investors. Musk, once Trump’s ally and head of the DOGE government cost-cutting initiative, has now labeled the bill a “disgusting abomination” and urged Congress to kill it.
Trump, visibly frustrated, acknowledged the strain, saying, “Don’t know if we’ll have a great relationship anymore.” The legislation’s removal of EV subsidies is reportedly at the heart of Musk’s outrage, especially since Tesla stands to lose over $1.2 billion in annual profits and another $2 billion from reduced credit sales due to related Senate action.
Tesla’s Troubles Grow As Musk Gets Political
The fallout comes as Musk distances himself from the White House following months of protests against Tesla’s political alignment. While SpaceX and Starlink remain dominant, Tesla’s sales are slipping in major markets like Europe, China, and California. Musk’s outspoken support for Trump once boosted Tesla’s stock, but his recent criticism has left both Republican and Democratic customers uneasy.
Investor sentiment is turning volatile. The Tesla stock roller-coastered in recent months, spiking 169% after Musk endorsed Trump in 2024, only to tumble 54% amid backlash. As Musk shifts his focus back to his companies, traders like Dennis Dick warn that his politics are becoming a liability for Tesla’s brand and market value.
Risks Mount As EV Subsidies Face the Axe
With the $7,500 EV credit on the chopping block and Tesla’s reliance on incentives under threat, analysts warn of significant profit impacts. J.P. Morgan estimates a potential $3.2 billion blow to Tesla if Trump’s bill becomes law. Meanwhile, the protest movement dubbed “Tesla Takedown” is still gaining steam.
Despite the drama, Tesla remains the most valuable automaker globally, holding a $1 trillion market cap—dwarfing rivals like Toyota. But with shares now down 22% this year and political headwinds blowing hard, the company’s future looks far less certain than it did just months ago.
