Tesla Inc. (TSLA) experienced a sharp decline in its stock price following a renewed public feud between CEO Elon Musk and former U.S. President Donald Trump. This escalating political clash has significantly unsettled investors, leading to a nearly 7% drop in Tesla’s shares and wiping billions off the company’s market capitalization.
The Root of the Conflict: Musk vs. Trump
The feud reignited after Elon Musk publicly condemned President Trump’s proposed $3.3 trillion tax and spending bill, calling it “insane and destructive.” Musk warned that the legislation could severely impact Tesla’s business, especially the federal electric vehicle tax credits that benefit the company’s sales.
In response, Donald Trump accused Musk of receiving more government subsidies than any individual in history and called for investigations into federal contracts awarded to Tesla. The back-and-forth has stirred concerns among investors about potential regulatory hurdles and political risks affecting Tesla’s operations.
Impact on Tesla’s Stock Performance
Following the public dispute:
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Tesla’s stock plunged approximately 7%, erasing over $15 billion in market value within days.
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The stock is now down nearly 25% year-to-date, reflecting broader market challenges.
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Tesla faces intensified competition, slowing sales growth, and concerns over its product lineup’s aging appeal.
Analysts warn that continued political tensions could drive further volatility and regulatory scrutiny, suggesting caution for current and prospective investors.
Broader Challenges for Tesla
Besides the Musk-Trump feud, Tesla grapples with several internal and external pressures:
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The “Tesla Takedown” movement has targeted the company’s dealerships with protests and vandalism, negatively impacting sales momentum.
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Q1 2025 sales reportedly dropped 20%, with expectations of an 8% decline in Q2.
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Rising interest rates and supply chain issues continue to pressure profit margins.
What Investors Should Watch
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Regulatory Environment: Political conflicts may increase government oversight or change subsidy policies that support Tesla’s business model.
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Leadership Focus: Elon Musk recently took direct control of Tesla’s U.S. and European sales operations, signaling a more hands-on approach amid challenges.
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Market Competition: Rivals continue to launch competitive electric vehicles, potentially eroding Tesla’s market share.
Conclusion
Tesla’s stock decline amid the Elon Musk–Donald Trump feud underscores how political dynamics can influence market performance and investor sentiment. While Tesla remains a dominant player in the electric vehicle industry, navigating these political and operational headwinds will be critical for its near-term stability.
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