Tesla shares hit as Trump-Musk feud explodes
Investors sold off shares in Tesla on Thursday, as tensions erupted between boss Elon Musk and US President Donald Trump.Shares in the electric car company dropped 14%, wiping out roughly $150bn in market value in one of the worst days in months.The losses were an indication of what might be at stake for Musk, as he breaks with a White House known for wielding the power of government against what it sees as enemies.As the dispute devolved, Trump threatened to cut off government contracts to Musk's companies, including rocket firm SpaceX, which has contracts worth tens of billions of dollars with the government.
"Go ahead, make my day," Musk fired back in response to the threat.The stark turn in the relationship between the two men played out live on social media, quickly spiralling from policy disagreements into personal insults. Trump and Musk enter bitter feud - and Washington buckles upTrump 'very disappointed' by Musk as row explodes into publicAnalyst Dan Ives of Wedbush Securities, a longtime Tesla cheerleader, called it "jaw dropping and a shock to the market",He said the clash had sparked fear among investors about what it might mean for regulation of the company, which is seeking to expand self-driving and robotics and had hoped for a more relaxed regulatory approach under the Trump administration. "This must start to be calmed down," Mr Ives wrote in a note, adding that it "put a fly in the ointment of the Trump regulatory framework going forward".
Musk's foray into government has already proven a wild ride for Tesla investors.Shares had surged last year, on hopes his alliance with Trump would benefit the company.But investor sentiment soured this year, as Musk's alliance with Trump and his role leading controversial cuts to government spending proved a lightning rod, sparking backlash and hurting sales, especially in Europe. Investors were also concerned that Musk - who had been fighting for a record-breaking pay package - was not focused on the company.Last month, the head of Tesla's board was forced to publicly deny a report that the company had started to look for someone else to lead the firm. Musk's pledge on an investor call that he would be stepping back from his role leading Doge had prompted an upswing in the stock. He formally left the government at the end of last month. But Tesla now finds itself back in the political crossfire.
The breach with Trump was sparked by Musk's criticism of a Trump-backed spending bill.Musk has sought to rally opposition, arguing that it will add too much the government's debt load. He has also been critical of Trump's tariffs, which he said on Thursday would cause an economic recession in the second half of the year. Trump said Musk's welcome at the White House was wearing thin and accused him of being unhappy about the elimination of a tax credit for electric vehicles, which has been key to Tesla's sales in the US. The two men have also clashed over Trump's decision to withdraw his nomination of Jared Isaacman, a Musk ally, to lead Nasa. Thursday's fall put the company's share price at its lowest level since May, erasing gains that had been made on hopes that Musk would refocus attention on the company.As the two men went at it, investors watched in disbelief. "Can someone please take the phone away from him," wrote investor Ross Gerber, who has been vocal about his concerns about the impact of Musk's politics on Tesla and cut back his holdings. "Tesla is getting destroyed."
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