Terrible Tuesday: Donald Trump to deport Elon Musk? The real reason Tesla stock has sunk
Tesla stock took a sharp hit on Tuesday, dropping nearly 5%, after President Donald Trump reignited a heated feud with Elon Musk, threatening to cut government subsidies to Musk's companies, including Tesla (TSLA) and SpaceX. The renewed clash comes just days after Musk criticized Trump's massive tax and spending bill, calling it 'insane and destructive.'
In a post on Truth Social, President Trump claimed,
'Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa.'
He added,
'No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE.'
Trump's comments, and the ongoing political drama, are sparking real market consequences. Here's a closer look at what's going on and why Tesla investors are growing increasingly uneasy.
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Why did Trump threaten Tesla's government subsidies?
President Trump's remarks were in direct response to Elon Musk's strong criticism of the administration's new spending bill. The bill, which cleared the Senate on Tuesday, includes a surprise move to eliminate
EV tax credits
earlier than expected—a decision that could significantly hurt Tesla customers and the company's bottom line.
Musk slammed the bill on his platform X, calling it a handout to 'industries of the past' and warning that it would 'severely damage industries of the future.'
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The legislation would add $1 trillion to the original spending plan and potentially cut $1.2 billion from Tesla's annual profit by removing tax incentives for electric vehicles.
Trump, doubling down on his stance, reminded the public,
'Elon Musk knew, long before he so strongly endorsed me for President, that I was strongly against the EV Mandate.'
How much has Tesla actually received in federal support?
While Tesla's EV tax credit program has faced scrutiny, it's SpaceX that has benefited more directly from government funds. According to U.S. federal spending data, SpaceX has received over $21 billion in government contracts over the years—covering rocket launches, satellite programs, and space missions.
Musk's growing influence and heavy reliance on federal support have made his businesses a lightning rod in today's political debates.
What impact is the Trump-Musk feud having on Tesla's stock?
Tesla shares fell nearly 5% on Tuesday, following a 1.9% drop on Monday when the Senate first began voting on amendments to the spending bill. These losses come on top of a previous $150 billion wipeout in Tesla's market value in early June, when Trump and Musk first began trading blows online.
Musk's latest post—a viral image of Pinocchio with 'liar' stamped across it—accused lawmakers of abandoning promises to reduce government spending.
'Anyone who campaigned on the PROMISE of REDUCING SPENDING, but continues to vote on the BIGGEST DEBT ceiling increase in HISTORY will see their face on this poster in the primary next year,'
Musk warned on X.
Wedbush analyst Dan Ives cautioned investors Tuesday, writing:
'Tesla investors want Musk to focus on driving Tesla and stop this political angle … At the end of the day, being on Trump's bad side will not turn out well.'
Tesla Stock Today
Current Price:
$301.73, down around 5% intraday
Daily Range:
$293.75 – $305.78
Trading Volume:
~102 million share
Expected Q2 Deliveries:
Down 11% year-over-year
Total
SpaceX Government Contracts
:
$21+ billion
Tesla Regulatory Credit Earnings in 2024:
$2.8 billion
How is Tesla stock reacting to the Trump-Musk feud?
Tesla's shares fell
4.8% on Tuesday
, after a
1.9% dip on Monday
, as the Senate moved forward with the controversial bill. The sell-off reflects rising investor anxiety—not only over policy changes but also Musk's increasingly political behavior, which many feel is distracting from Tesla's business performance.
The conflict isn't new. Earlier in June, a similar war of words between Trump and Musk wiped out
$150 billion in Tesla's market value in a single day
.
How much federal funding have Tesla and SpaceX received?
SpaceX alone has secured
over $21 billion
in U.S. government contracts over the years. Tesla, meanwhile, has benefited from
EV incentives
, clean energy subsidies, and regulatory credits. In 2024, Tesla earned an estimated
$2.8 billion
just from these credits.
Altogether, Musk's companies have gained tens of billions in support from federal programs, raising concerns among critics who argue about fair competition and spending efficiency.
Are Tesla's global sales also declining?
Yes. Adding to the pressure, Tesla's performance in Europe continues to decline. June marked the sixth straight month of falling sales in countries like Sweden and Denmark. Meanwhile, deliveries in China have also slipped, and global delivery numbers—due this week—are expected to show an 11% year-over-year drop.
Analysts forecast around
366,000 global deliveries
for Q2, compared to over
406,000
in the same quarter last year.
Are Tesla's sales also slipping in other markets?
Adding to the pressure, Tesla is facing ongoing sales declines in Europe. In June, the company posted its sixth consecutive monthly drop in Sweden and Denmark. This adds to growing concerns ahead of Tesla's upcoming global delivery report due Wednesday, where Wall Street is expecting an 11% year-over-year decline in deliveries.
This data paints a challenging picture for Tesla in both the domestic and global markets, with investor focus now shifting to performance figures amid political volatility.
What's at stake for Elon Musk and Tesla going forward?
Musk's political involvement continues to be a wildcard for Tesla investors. While he remains one of the most innovative and influential figures in tech, his battles with President Trump and controversial statements are proving to be more than just distractions.
Calls for Musk to refocus on business, rather than political rivalries, are growing louder among investors. Meanwhile, Trump's control over fiscal policy and his push to defund EV programs puts Tesla in a vulnerable position—especially with billions in federal incentives at stake.
As the feud unfolds, Tesla's future may depend on how well it can navigate both political threats and economic headwinds.
Tesla stock dropped 4.8% Tuesday after Trump threatened to cut subsidies to Musk-led companies.
SpaceX has received over $21 billion in U.S. government contracts to date.
The Senate-approved spending bill could remove EV tax credits earlier than expected, costing Tesla up to $1.2 billion annually.
Tesla deliveries are expected to fall 11%, with drops reported in Sweden and Denmark for six straight months.
Analysts warn that Musk's political battles could hurt Tesla's long-term investor confidence.
FAQs:
Q1: Why did Tesla stock drop after Trump's subsidy threat?
Trump's plan to end subsidies could slash Tesla's profits, causing investor panic.
Q2: How much government funding has SpaceX received so far?
SpaceX has received over
$21 billion
in U.S. federal contracts
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