Tesla stock drops as Trump and Musk's public feud escalates
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By the end of the trading day, $150 billion of Tesla’s value had been erased.

WASHINGTON — After Donald Trump’s election, investors poured hundreds of billions into Tesla stock, banking on the belief that political dynamics would outweigh financial gains.

In three hours Thursday, they learned yet again how dangerous that gamble could be.

In a dramatic downturn, Elon Musk’s electric vehicle company saw its shares nosedive over 14% as investors rapidly offloaded their holdings. This sell-off occurred against a backdrop of a tense verbal clash between the president and Musk, the wealthiest individual globally. By the close of trading, Tesla’s market value diminished by $150 billion, which is more than the combined market capitalization of Starbucks and numerous other major U.S. corporations.

The conflict ignited over the president’s proposed budget, but quickly escalated into a bitter feud. Musk claimed Trump’s election win was not possible without his support, to which Trump responded by hinting at potential government action against Musk’s ventures, including Tesla and SpaceX.

“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,” Trump wrote on his social messaging service Truth Social. “I was always surprised that Biden didn’t do it!”

The drop on Thursday partially reversed a big runup in the eight weeks since Musk confirmed that Tesla would be testing an autonomous, driverless “robotaxi” service in Austin, Texas, this month.

Investors fear Trump might not be in such a rush to usher in a future of self-driving cars in the U.S., and that could slam Tesla. So much of its real business selling electric cars is struggling now and so it needs the promise of a new age of driverless cars to be realized— and fast.

“The whole goal of robotaxis is to have them in 20 or 25 cities next year,” said Wedbush Securities analyst Dan Ives, one of Tesla’s biggest fans, but now worried. “If you start to heighten the regulatory environment, that could delay that path.”

He added, “There is a fear that Trump is not going to play Mr. Nice Guy.”

Trump’s threat to cut government contracts seems targeted more to another of Musk’s businesses, SpaceX, than his car company. The privately held rocket company has received billions of dollars for sending astronauts and cargo to the International Space Station, providing launches and doing other work for NASA. The company is currently racing to develop a mega rocket for the space agency to send astronauts to moon next year.

A subsidiary of SpaceX, the satellite internet company Starlink, appears to also have benefited from Musk’s once-close relationship with the president.

On a trip with Trump to the Middle East last month, Musk announced that Saudi Arabia had approved Starlink for aviation and maritime use. Though its not clear how much politics has played a role, a string of other recent deals in Bangladesh, Pakistan, India and elsewhere has come as Trump has threatened tariffs and sent diplomats scrambling to please the president.

One measure of SpaceX’s success: A private financing round followed by a private sale of shares in recent months reportedly valued it at an $350 billion, up from an estimated $210 billion a year ago.

Now all that is possibly in danger. Tesla shares got even a bigger lift from Musk’s close relationship with Trump, initially at least.

After the presidential election in November, investors rushed into the stock, adding more than $450 billion to its value in a few weeks. The belief was that the company would see big riches as Trump eased regulatory oversight of Tesla. They also were betting that the new administration would embrace Musk’s plans for millions of cars on U.S. roads without drivers behind the wheel.

After hitting an all-time high on Dec. 17, the shares retreated as Musk’s time as head of a government cost-cutting group led to boycotts and a hit to Tesla’s reputation. They’ve recently popped higher again after Musk vowed to focus more on Tesla and its upcoming driverless taxi launch.

Now investors aren’t so sure, a worry that has translated into big paper losses in Tesla stock held by Musk personally — down $20 billion for the day.

Copyright 2025 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.     

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