Tesla falls sharply after Musk and Trump feud gets nasty

Tesla is down by double digits after CEO Elon Musk and President Trump had a very public falling out that started off as a budget dispute and escalated to a threat to pull the entrepreneur’s government contracts, marking what appears to be the end of a relationship between the leader of the free world and the world’s richest man.

Musk took issue with the government spending bill the president backed, which the entrepreneur said would add to the government’s debt and undercut the mission he was given to help reduce government spending. The bill also axes the federal EV tax credit for customers, which could dampen demand for Tesla and jeopardizes its revenue from selling regulatory credits, without which Tesla would have posted a loss last quarter.

On Thursday in the Oval Office, Trump responded by saying he’s “very disappointed in Elon.”

“I’ve helped Elon a lot,” he said.

That’s when Tesla began to slip. As the spat escalated, it started to bringing other Trump trades down with it. So far, the dispute has destroyed well over a hundred billion dollars in market value for Tesla alone.

Musk spent a small fortune of his personal wealth getting Trump elected. He responded on X that without him, “Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate.”

Then the gloves came off.

Musk, 54, later (ominously) pointed out that Trump, 78, has 3.5 years left as president “but I will be around for 40+ years…”

Then Trump hit him where it hurts. On Truth Social, Trump said the easiest way to save money in the bill would be to cut the many government contracts and subsidies that Musk’s businesses benefit from. In addition to the EV tax credits that have made Teslas more affordable for some, SpaceX counts the US government as one of its largest customers. Musk then alleged that Trump is in the Epstein files.

After Trump was elected, Tesla shares rose as investors banked that Musk’s cozy relationship with the president would benefit the company. But without that relationship, what’s left are policies that mostly hurt Tesla, like tariffs and cutting the EV tax credit. In fact, analysts at JPMorgan estimated the budget bill alone would cut Tesla’s profits in half.

What a ride. At first, Tesla’s relationship with the president was great for the stock. Then the company realized Democrats buy cars, too, and Europeans and other foreign markets didn’t like his political stances. Now, the breakup is hurting.