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In early June 2025, Tesla experienced a dramatic decline in market value following a heated public dispute between CEO Elon Musk and former President Donald Trump. The confrontation began when Musk criticized Trump’s proposed “One Big, Beautiful Bill Act”—which included elimination of electric vehicle tax credits—labeling it a “disgusting abomination” and urging his social media followers to oppose it. Almost immediately, Tesla’s stock tumbled over 14%, erasing more than $150 billion in market capitalization in a single trading day and knocking the company’s valuation from above $1 trillion to around $913 billion.
What Triggered the Feud?
Musk had recently stepped down from his advisory role in a Trump-led government efficiency department and used his platform to actively campaign against the bill. Trump retaliated strongly—first expressing public disappointment in Musk, then accusing him of disloyalty despite prior support. On Truth Social, Trump escalated the matter, branding Musk “CRAZY” and threatening to revoke lucrative government contracts granted to Tesla and SpaceX.
Stock Market Fallout
The clash wiped out a substantial portion of Tesla’s earlier gains. Shares had rebounded earlier in the year after Musk pledged to “step back” from politics, but this event reversed much of that optimism. As of early June, Tesla stock was down about 30% year-to-date—a stark reminder of how intertwined politics and market performance have become for the company.
Broader Implications
This high-profile spat underscores Tesla’s vulnerability to political intervention. The proposed tax-credit cuts alone could cost Tesla around $1.2 billion in annual incentives—compounding issues stemming from falling global vehicle demand and uncertain macroeconomic conditions.
Moreover, Trump’s explicit threats to eliminate NASA or Department of Defense contracts highlight the strategic risk for Musk: much of Tesla’s and SpaceX’s future depends on government partnerships and regulatory alignment. The unpredictable political environment places additional pressure on Tesla’s long-term stability.
The Road Ahead
By mid-June, Tesla began to claw back some losses, with stocks bouncing up 6% on signs of de-escalation. Musk even publicly expressed regret over the tone of his remarks, and Trump signaled less hostility, sparking hopes of reconciliation. While the immediate turbulence may subside if tensions ease, the episode leaves a lasting reminder: Tesla’s valuation doesn’t just reflect technological innovation or consumer demand—it’s increasingly shaped by political winds.
