Tesla shares fell by 14%, wiping out $150 billion in market value on Thursday. Notably, there was no company-related news to explain the crash. Instead, the timing clearly pointed to Musk’s very public feud with Trump.
Tax Bill Disagreement
Initially, the fallout began when Musk criticized Trump’s new tax and spending bill. As a result, Trump hit back and accused Musk of being upset over the loss of tax incentives for electric vehicles. He said, “He’s upset because the bill takes away tax benefits for electric vehicle purchases.”
Shortly before the fight began, Musk had stepped down from his role as a government adviser.
Investors React to the Political Fight
Consequently, traders started dumping Tesla shares. Many feared the political drama would hurt Musk’s business empire. Tesla shareholder Dennis Dick explained, “Elon’s politics continue to harm the stock. First he aligned himself with Trump, which upset many potential Democratic buyers. Now he has turned on the Trump administration.”
Trump Suggests Cutting Federal Support
Meanwhile, Trump proposed cutting off Musk’s federal contracts. He wrote on Truth Social, “The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. I was always surprised that Biden didn’t do it.”
If carried out, this move could damage several of Musk’s companies that rely on government support, including Tesla and SpaceX.
Tesla’s Future Could Be at Risk
Furthermore, the feud may cause delays for Tesla’s major projects. For example, the U.S. Department of Transportation must approve the company’s new robotaxis. These vehicles won’t have pedals or steering wheels, making regulatory approval critical.
Without strong government ties, Tesla’s plans for the future could hit serious roadblocks.
Tension Creates Uncertainty
In summary, the Musk-Trump feud has shaken investor confidence. With $150 billion already lost, the future impact could grow. The conflict may not only hurt Tesla’s image but also delay key innovations and limit access to federal funding.
