Shares of Tesla tumbled 8% at the opening bell Monday as the feud between CEO Elon Musk and Trump reignited over the weekend.
Elon Musk, previously a significant supporter and contributor to Trump, has declared his intention to establish a third political party in response to the Republican spending bill that was approved at the end of last week. Musk has expressed strong disapproval of the bill, arguing it would damage employment opportunities and hinder the growth of emerging industries.
In a social media post on Sunday, Trump said that the billionaire owner of SpaceX, Tesla and X had gone “off the rails” in recent weeks.
There is concern among investors that Musk’s businesses, which benefit from substantial federal funding, might encounter difficulties if his conflict with Trump escalates.
“With the autonomous technological future on the horizon and the current surge in AI development, Musk and Tesla should avoid provoking further conflict as Trump could impose additional challenges for Musk, Tesla, and SpaceX if this political clash intensifies, particularly as we approach the 2026 mid-term elections,” wrote Dan Ives, an analyst from Wedbush Securities, in a client note late Sunday.
Tesla shares have been extremely volatile since Musk went all-in for Trump in the run-up to last year’s election with the company facing a growing backlash as a result of Musk’s embrace of right-wing politics and his role in the Trump administration.
Tesla sales plunged 13% in the first quarter compared with the same period last year, and industry analysts believe a large part of that slump is being driven by Musk’s affiliation with Trump and far-right parties like Germany AfD. Tesla is also facing rising competition globally, particularly from Chinese automakers such as BYD and Great Wall, which are quickly expanding globally, offering relatively affordable electric vehicles with ultra-fast battery charging systems.
Since hitting an all-time high of $479.76 on Dec. 17, Tesla shares have lost about 40% of their value. Tesla shares are down about $26 each since Thursday’s close, to $289.75.
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