Elon Musk's feud with Trump likely won't blow up Tesla's robotaxi push, analysts say
Elon Musk 's public sparring with President Donald Trump last week may have briefly put a dent in Tesla's value, but analysts say they can't see any reason the feud would have a long-term impact on the company's business, including its robotaxi ambitions.
The feud between Musk and Trump began with the Tesla CEO's criticism of the GOP's spending bill, which slashes EV tax credits and is estimated to add more than $2.4 trillion to the national deficit. The clash then escalated with threats coming from both sides: Trump threatened to cancel government contracts with Musk's companies, and the CEO fired back by saying he'd shut down SpaceX's Dragon spacecraft before reneging.
During Musk's fight with Trump on Thursday, Tesla's stock dipped 14%, wiping out $138 billion from the company's market cap. The company recovered some of the losses the following day. Yet the CEO saw one of his biggest single-day hits to his net worth with an estimated $34 billion loss.
Still, some analysts say this storm will pass.
"Musk's and Trump's relationship has an impact on the stock and maybe investor sentiment, but as far as the actual business impact for Tesla, I never thought Trump getting elected was positive or that negative for Tesla," Seth Goldstein, Morningstar analyst, told Business Insider. "So with the feud that started between Trump and Musk, I never really viewed that as that positive or negative for Tesla either."
While it may not be helpful to no longer be in Trump's good graces, Goldstein said the president has already made clear that he would cut EV subsidies, which the analyst viewed as having the most negative impact not just on Tesla but on all EV makers.
Gene Munster, Tesla investor and managing partner at Deepwater Asset Management, estimated in a Friday report that the elimination of the tax credits could reduce 2025 deliveries by 15%.
Trump wishes Tesla well
As far as Tesla's June robotaxi launch in Austin goes, which Musk says will unlock trillions of dollars of market value for his company, analysts say there's little reason to believe the administration would want to hinder progress there.
"In my view, the White House has little to gain in standing in front of autonomy, given autonomy is central to physical AI, and for the US to be a leader globally in AI, it also needs to be a leader in physical AI," Munster said in his Friday report. "The bottom line, I expect cooler heads to prevail and the Federal Government will continue to support the growth of these services."
Goldstein told BI that he doesn't see many avenues the administration could take to hinder Tesla's robotaxi progress. He said the Department of Transportation is reviewing federal standards for autonomous vehicle safety.
"In theory, if Trump wanted to see Musk face retaliation and target Tesla, they could, say, require autonomous vehicles to have lidar in order to be approved by the federal government for operation, but I don't think they're going to get that detailed," Goldstein said. "I think that Trump could more easily just target SpaceX by just cutting their contracts if he really wanted to hurt Elon, versus making some really weird, nuanced policy."
Spokespeople for the DOT and the White House did not respond to a request for comment.
In a note on Friday, Morgan Stanley analyst Adam Jonas wrote that Musk's feud with Trump doesn't impact the "longer-term vectors that drive the stock's value."
"AI leadership, autonomy/robotics, manufacturing, supply chain re-architecture, renewable power, critical infrastructure... Tesla still holds so many valuable cards that are largely apolitical, in our opinion," Jonas wrote.
By late Friday afternoon, the online jabs had slowed down, but the Trump-Musk alliance remained on ice. The president told NBC News on Saturday that he doesn't expect to mend his relationship with Musk and warned the CEO against supporting Democratic candidates.
Still, during a press gaggle on Air Force One on Friday, Trump said he hadn't thought about Musk but wished him and his company well.
"I mean, I hope he does well with Tesla," Trump said.
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