A fiery feud between President Donald Trump and Tesla Inc (NASDAQ:TSLA) CEO Elon Musk shook markets on Friday, as the electric vehicle maker’s stock took a sharp dive following a series of bitter online exchanges, marking a rapid public deterioration in the pair’s relationship.
Tesla shares plunged 14.3%, wiping out more than $150 in the company’s value — its worst single-day market cap loss in history. The fallout from the spat added pressure to an already volatile global market, with investors grappling with broader economic signals, including US-China trade talks and potential changes to EV subsidies.
The breaking point: Trump vs. Musk
The drama began unfolding shortly after Musk’s purported exit from the US political scene, when he publicly criticized President Trump’s tax bill. In retaliation, Trump has called for eliminating Tesla’s electric vehicle (EV) subsidies.
“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts," Trump posted on his social media platform, directly targeting Musk’s company.
Musk quickly responded, dismissing the president’s threat, but tensions escalated. In a heated exchange, Musk even hinted at the potential for impeachment, suggesting Trump’s name could be found in the Epstein files.
As the exchange escalated, Tesla’s share price dropped, undoing its recent recovery since Musk has telegraphed his withdrawal from government work to focus on his companies, after it plunged earlier in the year amid blowback to his Department of Government Efficiency (DOGE)’s cost-cutting spree.
Impact on Tesla’s stock and market sentiment
Tesla’s 14.3% decline on Friday added fuel to concerns over the company’s vulnerability to political pressures. If the proposed cuts to EV credits are implemented, Tesla’s already razor-thin profit margins could be significantly strained, amplifying investor concerns over the company’s long-term viability.
The stock’s bad day contributed to a weak session for US markets, with major benchmarks finishing near worst levels despite a boost from positive trade developments.
As Tesla grapples with this latest setback, market watchers will be watching closely to see if the company can recover its losses or if the feud continues to drag down investor confidence.
China trade talks overshadowed
While markets had been focused on US-China trade talks, the Trump-Musk feud quickly overshadowed this development, diverting attention away from what had been positive news of resumed negotiations between Trump and Xi, especially in the context of rare earths.
With the fate of EV subsidies now uncertain, Tesla’s troubles have added another layer of unpredictability to an already volatile market. As the feud develops, all eyes will be on Tesla and whether the company can withstand these pressures, or if it will continue to be dragged into political storms.