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Trump-Musk feud sends Tesla stock plunging

  • By Al Mayadeen English
  • Source: News websites
  • 6 Jun 2025 15:41
3 Min Read

Tesla shares drops 14% after Trump targets Elon Musk over government contracts, raising stakes for SpaceX, X, and other Musk ventures.

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  • Trump-Musk feud sends Tesla stock plunging
    Elon Musk speaks during a news conference with President Donald Trump, right, as Treasury Secretary Scott Bessent, from left, and Commerce Secretary Howard Lutnick, listen in the Oval Office of the White House on May 30, 2025, in Washington. (AP Photo/Evan Vucci)

Tesla shares fell by 14% on Thursday following the sharp escalation in the Trump-Musk feud, as President Donald Trump publicly threatened to end government subsidies and contracts benefiting Elon Musk’s companies. The market reaction highlights investor concerns over the potential political and regulatory fallout facing Musk’s sprawling business empire.

Trump, writing on his Truth Social platform, claimed cutting government support to Musk could save the US "billions and billions of dollars," stating, "The easiest way to save money in our Budget... is to terminate Elon’s Governmental Subsidies and Contracts." Musk responded on his own platform, X, with sarcasm: "This just gets better and better,” adding, “Go ahead, make my day."

Read next: Trump-Musk feud boils over budget and explosive Epstein claim

While Tesla has relatively few direct government contracts, its performance is significantly influenced by federal policies, including electric vehicle incentives and emissions regulations. Musk’s other companies, SpaceX, xAI, Neuralink, and X, rely far more heavily on federal contracts and regulatory approvals.

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For example, SpaceX has received $15.2 billion in funding from NASA and another $5.8 billion from the Department of Defense, even though these partnerships are considered critical, particularly for space transportation, where viable alternatives are limited, SpaceX remains subject to oversight from NASA and the FAA. Starlink satellite internet service also depends on ongoing regulatory approval from the FCC.

EV tax credits and emissions standards at risk

Tesla could face a direct financial hit if Trump were to follow through on his threat to roll back policies. Analysts at JPMorgan estimate Tesla could lose $1.2 billion annually from the elimination of the $7,500 EV tax credit, a major incentive that boosts consumer demand and allows Tesla to raise vehicle prices.

In addition, Tesla has earned over $8 billion in recent years by selling regulatory credits to automakers struggling to meet US and state emissions standards. Trump has signaled support for repealing those standards and eliminating states’ authority to set their own rules, a move that would eliminate the market for those credits.

Beyond federal subsidies, Musk’s operations face legal scrutiny. The Securities and Exchange Commission (SEC) is investigating whether Musk violated federal rules during his acquisition of X (formerly Twitter). Meanwhile, the National Highway Traffic Safety Administration has launched multiple probes into accidents involving Tesla vehicles using the Full Self-Driving (FSD) system.

Musk has pinned Tesla’s future on the rollout of a driverless taxi network, with the first service scheduled to launch in Austin, Texas, later this month. But the viability of that plan remains contingent on federal regulatory approval, which could be influenced by political developments.

Tesla investors, who once viewed a Trump return as favorable for Musk’s business interests, are now recalculating the risks. Thursday’s Tesla stock drop reflects growing unease over the clash between two of the most influential figures in US politics and tech.

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