Tesla Shares Plummet as Elon Musk and President Trump Clash Over Spending Bill

• Tesla’s stock fell 14% on Thursday, erasing $152 billion in market value, as President Trump threatened to pull government contracts from Elon Musk’s companies.
• The conflict escalated after Musk criticized Trump’s spending bill, which excludes EV credits and imposes a new annual fee on EV drivers.
• Musk’s attacks on the bill come amid Tesla’s struggling sales in major markets and pressure to launch its delayed driverless ride-hailing service.

Tensions between Tesla CEO Elon Musk and President Donald Trump reached a boiling point on Thursday, causing the electric vehicle maker’s stock to plummet by 14%. The substantial drop, which erased $152 billion in market value, marked the biggest hit to Tesla’s market cap in history, pushing it below the $1 trillion benchmark to settle at $916 billion.

The conflict escalated as President Trump threatened to pull government contracts from Musk’s companies in response to the billionaire’s criticism of the administration’s spending bill. Trump took to Truth Social, writing, “Elon was ‘wearing thin,’ I asked him to leave, I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!”

Speaking from the Oval Office earlier on Thursday, Trump revealed that Musk was upset about the exclusion of EV credits from the bill. “Elon and I had a great relationship. I don’t know if we will anymore,” Trump said, expressing his surprise at Musk’s reaction.

Musk, known for his unfiltered comments, fired back with a simple “Whatever” as the president spoke. He later posted on X, claiming, “Without me, Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate.”

The world’s richest man has been vocal in his opposition to the spending bill, threatening to make lawmakers who vote for it face primary elections and calling the bill a “disgusting abomination.” This marks a significant shift in his stance towards the administration, especially considering his recent role as head of Trump’s Department of Government Efficiency, or DOGE.

Despite weak sales numbers, Tesla shares had rallied 22% in May, but the recent conflict has led to an 18% decline this week. Year-to-date, shares are down nearly 30%, a far cry from the high of $488.54 reached on December 18.

Walter Isaacson, author of a Musk biography, commented on the situation, stating, “One of the things about Elon is when he goes all in, he goes all in. He is somebody who’s not exactly calibrated in these things and he is seriously upset.”

Reports suggest that Musk had attempted to convince Trump and other GOP members to amend aspects of the bill that would curtail EV and residential solar tax credits, which are crucial to Tesla’s profitability. The measure also proposes a new annual $250 fee on EV drivers, further straining the company’s position.

Tesla is facing additional challenges, including plummeting sales in major European markets and a declining brand reputation in the West. The company is also under pressure to launch its long-delayed, driverless ride-hailing service in Austin, Texas, where competitor Waymo is already operating a major commercial robotaxi service in partnership with Uber.

Isaacson also noted that Musk was frustrated with members of the Trump administration who opposed the nomination of Jared Isaacman as head of NASA, seeing it as an attempt to target Musk indirectly. Isaacman, who led two private SpaceX flights and invested $27.5 million in the company, ultimately had his nomination withdrawn over the weekend.

As the clash between Elon Musk and President Trump continues to unfold, the impact on Tesla’s stock and the future of the company’s relationship with the administration remains uncertain.