Tesla Faces Decline Amid Tensions Between Trump and Musk

Tesla Inc. saw its stock plummet as tensions between Elon Musk and President Donald trump escalated into a public spat between two influential figures.

On June 5, Trump expressed his “deep disappointment” regarding Musk’s comments on the management’s tax policy. In response, Musk took to social media to assert that “without me, Trump would have lost the election.”

The president hinted at possibly cutting federal contracts and subsidies for Musk’s ventures while claiming he had asked the Tesla and SpaceX founder to step down from his advisory role—an assertion that Musk labeled as false. Later in the day, he even suggested decommissioning a SpaceX vehicle utilized by the U.S.

Tesla’s shares dropped by 14% on June 5—the steepest decline as March—wiping out approximately $150 billion from its market capitalization. The stock continued to slide with an additional drop of 2.2% in after-hours trading.

This exchange of barbs between one of the wealthiest individuals globally and a sitting president signifies a dramatic shift away from their previously strong political alliance.

musk invested over $250 million to support Trump’s campaign efforts for re-election. In return, Trump appointed him to spearhead initiatives aimed at reducing government expenditure before Musk distanced himself from that position last week.

Citing insights from Ross Gerber, CEO of Tesla investor Gerber Kawasaki, he criticized Musk’s actions during an interview with Bloomberg TV, warning they could lead to legal challenges from investors and substantially diminish SpaceX’s valuation.

“Elon isn’t acting in favor of his shareholders,” gerber remarked while noting that his firm has been scaling back its investments in Tesla recently. “we’re witnessing what could be seen as the unraveling of the entire Musk empire.”

>

This feud raises concerns about potential governmental retaliation against Musk’s companies—a tactic reminiscent of Trump’s previous actions against perceived adversaries like Harvard University.

The conflict also casts doubt on whether key policy changes sought by both parties will materialize—especially those related to autonomous vehicles which are vital for Tesla’s future growth prospects according to industry experts.

A showroom displaying Teslas located in West Bloomfield, Michigan (Emily Elconin/Bloomberg News).

The ongoing clash jeopardizes billions tied up in policies pushed forward by Trump and Republican lawmakers affecting Tesla directly—the company being central to Elon’s business portfolio.

The sweeping tax legislation proposed would eliminate credits worth up to $7,500 for certain electric vehicle buyers—including some Teslas—much sooner than anticipated; analysts estimate this could result in around $1.2 billion loss for Tesla this fiscal year alone according to JPMorgan estimates.

Musk has been actively lobbying against this tax bill since stepping back from his advisory role last week calling it a “disgusting abomination.” He reached out directly appealing for support among Republican lawmakers including House Speaker Mike Johnson regarding preserving these crucial EV tax incentives within current legislation proposals.

A separate Senate bill targeting California’s electric vehicle sales mandates poses another significant challenge potentially costing Tesla around $2 billion due regulatory credit losses per JPMorgan analysis.

Together these legislative moves threaten nearly half ($6 billion) expected earnings before interest & taxes projected by Wall Street analysts led Ryan Brinkman reported May 30th .

No comment was provided when requested by representatives at tesla.

The House-passed version aggressively phases out clean energy production credits years ahead schedule while imposing strict limitations on Chinese components rendering them practically ineffective along with restricting third-party sales options to .