Tesla Shares Crash 14% as Musk-Trump Feud Wipes Out $152 Billion in Market Value
Tesla Inc. suffered its worst single-day market value loss in company history on Thursday, with shares plummeting 14% and erasing over $152 billion as a bitter public feud erupted between CEO Elon Musk and US President Donald Trump over government spending legislation.
The electric vehicle maker’s market capitalisation fell below the critical $1 trillion threshold, settling at $916 billion by market close. The dramatic sell-off came after Trump threatened to terminate government contracts linked to Musk’s companies following the billionaire’s vocal criticism of the administration’s spending bill.
The dispute escalated when Trump posted on his Truth Social platform: “The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts.”
Speaking from the Oval Office earlier Thursday, Trump expressed disappointment with his former ally. “Elon and I had a great relationship. I don’t know if we will anymore. I was surprised,” the President told reporters.
Trump accused Musk of becoming difficult to work with, posting: “Elon was ‘wearing thin,’ I asked him to leave, I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!”
Musk responded defiantly on X (formerly Twitter), dismissing Trump’s comments with a simple “Whatever” before launching a counterattack. “Without me, Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate,” Musk posted.
The Tesla CEO has been increasingly critical of Trump’s agenda, calling the new budget bill a “disgusting abomination” and urging voters to challenge lawmakers who support it in future elections.
Tesla shares have declined in four of the past five trading sessions, falling 16% since Musk began criticising Trump’s spending legislation last week. The stock remains approximately 33% lower since Trump’s inauguration, despite initially rallying after the November 2024 election results.
The company’s shares had gained 22% in May despite reporting disappointing sales figures, but this week’s political drama has sent investors fleeing. Year-to-date, Tesla stock is down nearly 30% from its December high of $488.54.
The relationship between Trump and Musk began deteriorating after Musk’s role in the administration ended. He previously headed the Department of Government Efficiency (DOGE), a position that concluded last Friday.
The alliance between the two powerful figures “took off like one of SpaceX’s rockets. And then it blew up,” according to political analysts tracking the dispute.
The current budget bill under consideration proposes largely ending the popular $7,500 electric vehicle subsidy by the end of 2025, a move that directly impacts Tesla’s business model. Electric vehicle manufacturers have relied heavily on such incentives to drive consumer demand.
Financial analysts describe the situation as “essentially a high school friends feud between the once upon a time bromance of Musk and Trump,” with Tesla stock “under major pressure” as investors fear the breakdown will affect regulatory relationships.
The public nature of the dispute has created uncertainty about the future of government support for electric vehicles and space exploration, two key sectors for Musk’s business empire that includes Tesla and SpaceX.
