Tesla shares plunge as investors concerned over Musk, Trump feud

Global News

06-06-2025

Investors bought hundreds of billions of dollars of Tesla stock after Donald Trump was elected on a bet that politics were more important than profits.
In three hours Thursday, they learned yet again how dangerous that gamble could be.
Shares of Elon Musk's electric vehicle maker plunged more than 14 per cent in a stunning wipeout as investors dumped holdings amid a bitter war of words between the president and the world's richest man. By the end of the trading day, US$150 billion of Tesla's value had been erased, more than what it would take to buy all the shares of Starbucks and hundreds of other big publicly traded U.S. companies.
In after-hours trading, Tesla shares rose 0.8 per cent.
The disagreement started over the president's budget bill, then quickly turned nasty. After Musk said that Trump wouldn't haven't gotten elected without his help, Trump implied that he may turn the federal government against his companies, including Tesla and SpaceX.
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'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!'
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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.
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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.'
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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 US$350 billion, up from an estimated US$210 billion a year ago.
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Now all that is possibly in danger. Tesla shares got even a bigger lift from Musk's close relationship with Trump, initially at least.
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After the presidential election in November, investors rushed into the stock, adding more than US$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 US$20 billion for the day.