Tesla Endures One of Its Worst Trading Days Since IPO Amid Musk-Trump Feud

Tesla’s stock plunged 14% on June 5, 2025, wiping out $150 billion in market value after a public feud erupted between CEO Elon Musk and U.S. President Donald Trump. This drop marked one of Tesla’s worst trading days since its public listing.

The conflict began when Musk criticized Trump’s tax and spending bill, calling it a “disgusting abomination” on his social media platform X.

Trump responded by threatening to cut government contracts and subsidies for Musk’s companies, including Tesla and SpaceX, which together have received tens of billions of dollars in federal support.

The fallout rattled investors, who feared that Trump’s threats could become policy, jeopardizing Tesla’s future earnings. Tesla’s business model relies on government contracts and regulatory credits, especially the $7,500 federal tax credit for electric vehicles.

Analysts warn that if these incentives disappear, Tesla’s profits could fall by over a billion dollars annually. The company’s shares have already dropped 25–30% this year, reflecting both political risk and declining sales in key markets such as Europe, China, and the U.S.

The breakdown in the Musk-Trump relationship surprised many. Musk had supported Trump’s election campaign and briefly led a government cost-cutting agency.

Their alliance had previously boosted Tesla’s stock, as investors expected favorable regulatory treatment. However, Musk’s opposition to Trump’s latest budget bill and tariffs led to a rapid public split, with both men trading personal insults online.

Political Risk Triggers Market Reaction

Trump’s remarks about removing Tesla’s access to government contracts and subsidies triggered the sharp sell-off. Tesla also faces operational headwinds. The company reported a 13% drop in vehicle deliveries in the first quarter of 2025.

Sales in the U.K., Germany, Italy, and China have fallen sharply, with U.K. sales down over 45% in May. Meanwhile, Tesla’s plan to launch a robotaxi service in Texas faces regulatory uncertainty, as U.S. authorities continue to investigate the safety of its self-driving technology.

This episode highlights how political risk can quickly undermine even the world’s most valuable companies. For investors, the Tesla story is a reminder that business fortunes often depend as much on political relationships as on technology or market demand.

All figures and claims in this article are based on official company filings and public statements from government and corporate sources.

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