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Tesla Stock Plummets Amid Escalating Feud Between Elon Musk and Donald Trump

Shares of Tesla, the electric vehicle giant led by Elon Musk, experienced a significant drop on Tuesday as tensions between Musk and former President Donald Trump intensified. The clash centers around a contentious bill involving tax breaks and spending cuts, with Musk hinting at forming a new political party. This development comes as Tesla’s stock has already fallen over 20% this year, driven by declining global sales and Musk’s controversial ties with the Trump administration.

Tesla’s troubles are not confined to the U.S. market. The company is facing declining sales in Europe and China, with the China Passenger Car Association reporting a 15% drop in sales for May compared to the previous year. This decline is more than double the decrease from the prior month. The ongoing public spat between Musk and Trump is adding to investor concerns, as Tesla’s stock fell over 5% in morning trading.

Political Tensions and Market Reactions

The renewed hostilities between Musk and Trump have raised alarms among investors, particularly those with stakes in Musk’s ventures, including SpaceX. Wedbush Securities analyst Dan Ives commented on the situation, stating,

“This BFF situation has now turned into a soap opera that remains an overhang on Tesla’s stock with investors fearing that the Trump Administration will be more hawkish and show scrutiny around Musk-related US government spending related to Tesla/SpaceX and most importantly the autonomous future with the regulatory environment key to the future of Robotaxis and Cybercabs.”

The political divide between Musk and Trump primarily revolves around the proposed bill, which Musk has criticized for potentially stifling job creation and innovation. Over the weekend, Musk took to social media platform X to express his disapproval, describing the bill as “political suicide for the Republican Party.” His post garnered 26 million views, underscoring the public’s interest in the unfolding drama.

Musk’s Political Ambitions

As the Senate navigated a prolonged session on Tuesday, Musk suggested he would work to unseat members of Congress who support the bill. In a bold statement on X, he declared,

“Every member of Congress who campaigned on reducing government spending and then immediately voted for the biggest debt increase in history should hang their head in shame. And they will lose their primary next year if it is the last thing I do on this Earth.”

This post was viewed 32 million times, reflecting Musk’s influence and reach.

Musk further escalated the situation by announcing plans to establish a new political party, the “America Party,” should the bill pass. He argued for an alternative to the existing bipartisan system, stating, “Our country needs an alternative to the Democrat-Republican uniparty so that the people actually have a VOICE.”

Trump’s Counterattack

Trump, on his part, has not held back in his criticisms of Musk, particularly regarding electric vehicle mandates and subsidies. In a post on Truth Social, Trump accused Musk of benefiting disproportionately from government subsidies, suggesting that without them, Musk might have to “close up shop and head back home to South Africa.” Trump also hinted at potential government spending cuts targeting sectors where Musk is heavily involved, such as space exploration and electric vehicles.

During a press briefing on the White House lawn, Trump continued his verbal assault, suggesting that Musk’s displeasure over losing EV subsidies could lead to significant financial losses. When questioned about the possibility of deporting Musk, Trump cryptically mentioned the Department of Government Efficiency, or DOGE, as a potential threat to Musk’s business interests.

Implications and Future Outlook

Musk responded to Trump’s remarks by pledging to avoid further escalation, yet he couldn’t resist taking another dig at the former president. He questioned the logic of Trump’s cost-saving measures, highlighting the broader implications of the bill’s proposed debt increase.

“What good is Doge saving $160B when this bill increases the debt ceiling by $5T? It makes mockery of the work,”

Musk wrote.

The ongoing feud between Musk and Trump adds another layer of uncertainty to Tesla’s already volatile market position. Investors are closely monitoring the situation, wary of potential regulatory changes and political maneuvers that could impact Tesla’s operations and financial health. As the political and economic landscape continues to evolve, the stakes are high for both Musk and Tesla.

Looking ahead, the outcome of the legislative battle and the potential formation of a new political party by Musk could have far-reaching consequences for the U.S. political system and the future of the electric vehicle industry. As tensions simmer, stakeholders are left to ponder the implications of this high-stakes showdown between two of the most influential figures in American business and politics.

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