Billionaire’s feud with Trump rattles investors, raises fears of regulatory retaliation as Tesla pivots to robotaxis.
A public feud between former President Donald Trump and Tesla CEO Elon Musk sent Tesla shares into a nosedive June 5, erasing a staggering $150 billion in market value and fueling fears of political fallout for Musk’s sprawling business empire.
The drama began when Trump lashed out at Musk over the billionaire’s criticism of a new tax bill, accusing him of being upset over the planned rollback of electric vehicle subsidies. Musk, who once hailed Trump as his "First Buddy," hit back with scathing posts, reigniting tensions just months after briefly aligning with the former president.
Tesla stock plunged 14% in heavy trading, despite no company-specific news, as investors braced for the potential regulatory and financial fallout from the escalating spat.
“Elon’s politics continue to harm the stock,” said Dennis Dick, strategist at Stock Trader Network. “First he alienated Democrats, now he’s on Trump’s hit list.”
The timing couldn’t be worse for Musk. Tesla is betting its future on autonomous robotaxis — a sector heavily influenced by federal regulations. The U.S. Transportation Department and NHTSA are already scrutinizing Tesla’s “Full Self-Driving” software, especially after a fatal crash.
While Musk advocates for a unified federal framework for driverless vehicles, analysts warn that political retaliation could shape future rules to disadvantage Tesla, particularly its controversial reliance on cameras over radar or lidar systems.
“Getting on Trump’s bad side always brings the risk of personal retaliation,” said Morningstar analyst Seth Goldstein. “And Tesla has a lot at stake.”
Trump suggested slashing Tesla’s federal subsidies and government contracts as a way to trim spending, further spooking Wall Street. Musk’s personal net worth plunged by $27 billion in a single day, according to Forbes, landing at $388 billion.
Even as Tesla remains the world’s most valuable automaker — worth nearly $1 trillion before the selloff — the political turbulence adds to growing business pressures. Sales are slumping across key markets, EV demand is weakening, and a proposed budget plan could eliminate the $7,500 EV tax credit by the end of 2025. Senate legislation also threatens Tesla’s regulatory credit revenue in California.
Ross Gerber, CEO of Gerber Kawasaki Wealth and a longtime Tesla investor, summed up the concern:
“Every benefit Musk was getting now becomes a liability.”
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