Tesla shares dropped more than 14% on Thursday, June 5, erasing $150 billion from the company’s market value. The steep decline followed a public dispute between CEO Elon Musk and former US President Donald Trump, which unsettled investors and sparked concerns about possible government repercussions.
The conflict began after disagreements over the President’s budget bill escalated into a heated exchange. On his social platform, Truth Social, Trump threatened to cancel federal and state subsidies and contracts awarded to Musk’s companies, describing it as an “easy way to save money.”
“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,” Trump wrote. “I was always surprised that Biden didn’t do it!”
Tesla currently benefits from billions in government support, including a $7,500 tax credit for electric vehicle buyers. The threat of losing this backing triggered immediate concern on Wall Street, with analysts warning that the fallout could jeopardize Tesla’s future growth.
“The rapidly deteriorating relationship and now ‘major beef’ between Musk and Trump is jaw-dropping and a shock to the market,” Wedbush analysts noted in a client briefing. “This situation needs to be calmed down—it’s not good for either side.”
Despite the jitters, Wedbush maintained a bullish long-term outlook on Tesla, expressing confidence in the company’s autonomous driving projects. Still, the feud has added uncertainty around regulatory stability.
Musk’s close ties to the White House have significantly influenced Tesla’s recent performance. The stock surged more than 60% from Trump’s election in November 2020 through the end of 2024. However, backlash over Musk’s advisory role and controversies around the so-called ‘DOGE department’ spurred investor anxiety and public protests, prompting Musk to step down from his position.
Tesla has also struggled with disappointing sales and brand challenges, which have weighed on sentiment. Yet investor optimism remains fueled by AI and automation prospects, including a planned driverless robotaxi pilot in Austin, Texas.
“Investing in Tesla isn’t for the faint of heart,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown. “Musk’s enthusiasm is both a blessing and, at times, a curse. With such a pivotal few months ahead for the autonomous strategy, investors will want to see Musk focus fully on Tesla.”
Richard Hunter, head of markets at Interactive Investor, noted that the dispute reflects broader unease over Trump’s leadership style.
“The latest feud underscores growing concerns that the President’s unpredictable and irritable behavior mirrors a troubling global environment,” Hunter said. “Consumer sentiment is fragile amid fears of a weakening economic outlook.”
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