Tesla shares plummeted more than 14% on Thursday, June 5, amid the intensifying feud between CEO Elon Musk and U.S. President Donald Trump, erasing $150 billion from the company’s market valuation in a single trading day.
The sharp drop came after Trump publicly threatened to cut off government subsidies and contracts awarded to Musk’s companies.
“The easiest way to save money in our Budget — Billions and Billions of Dollars — is to terminate Elon’s Governmental Subsidies and Contracts,” Trump posted on his platform, Truth Social. “I was always surprised that Biden didn’t do it!”
Tesla currently benefits from substantial U.S. government support, including a $7,500 federal tax credit for electric vehicle buyers. Trump’s comments raised immediate alarm among investors and analysts, who fear the fallout could significantly impact the EV giant’s future.
“The quickly deteriorating friendship and now ‘major beef’ between Musk and Trump is jaw-dropping and a shock to the market,” analysts at Wedbush wrote in a note to investors. “This situation… must start to be calmed down… it’s not good for either side.”
Despite the turmoil, Wedbush maintained a long-term bullish outlook on Tesla, citing confidence in its AI-driven future, especially autonomous driving and robotaxi projects. Still, analysts acknowledged that the feud has injected new uncertainty into Tesla’s regulatory landscape and relationship with Washington.
Musk’s close ties to the White House had previously boosted Tesla’s performance. The carmaker’s shares had surged over 60% between Trump’s election in November and the end of 2024.
However, public backlash over Musk’s “DOGE department” and his role as a special government adviser ultimately forced him to step back — a move seen by some as an early sign of strain in the alliance.
Tesla’s current challenges go beyond politics. Recent quarters have shown weaker-than-expected sales, and the brand has faced increasing scrutiny in global markets. Still, investors remain hopeful, especially with Tesla’s upcoming robotaxi pilot program set to launch in Austin, Texas.
“Investing in Tesla isn’t for the faint of heart,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown. “Musk’s enthusiasm is both a blessing and, at times, a curse… but with such a pivotal few months ahead for the autonomous strategy, investors will want to see Musk give his full attention back to Tesla.”
Richard Hunter, head of markets at Interactive Investor, warned that the clash also has broader political implications.
“The latest feud has heightened unease that the President’s seemingly irascible and erratic behavior is symptomatic of the environment which has been created on a global scale,” he said. “Consumer sentiment is brittle given the wider context of what could be a weakening outlook.”
As the Musk–Trump war of words unfolds, Wall Street and Tesla stakeholders are watching closely, not just for market implications, but for how personal politics may shape the future of innovation and industry.
