Trump Pulls Tesla’s Support, Shares Plunge as Musk Faces Tough Reckoning

Tesla’s world changed overnight when President Donald Trump signed a law ending years of U.S. government support for electric vehicles.

This move erased the $7,500 federal tax credit that helped many Americans afford Teslas and cut off the rules that once allowed Tesla to make big money selling emission credits to other automakers.

As a direct result, Tesla’s stock dove 9.5% in a single day, wiping billions off its value. The new policy hit Tesla immediately. The company’s latest report revealed a 12% drop in revenue to $22.5 billion and a 16% cut in net profit.

Tesla sold fewer cars, and, to stay competitive, had to lower prices—just as support from Washington disappeared. The end of these federal incentives and credits leaves Tesla exposed to the full force of market competition.

This is especially true with the rise of fast-growing Chinese carmakers and other rivals. The policy shift played out alongside a fierce personal feud between Elon Musk and Trump.

Once allies—Musk even advised Trump on business matters—their relationship collapsed amid sharp disagreements over how government spending and incentives should work.

Musk called the policy a “disgusting aberration,” while Trump accused him of disloyalty but later insisted he did not want to destroy Musk’s business. Despite this turmoil, Musk is betting on new technology to save Tesla’s future.

The company is testing robotaxis in Texas and plans to launch a cheaper electric car to regain customers. Tesla’s $37 billion cash reserve gives it room to maneuver—but the comfortable days of government help are over.

Now, Tesla must prove it can thrive through pure innovation and smart business, without special help from Washington. This outcome matters far beyond Musk and Tesla. It shows how quickly government policy can reshape an entire industry.

For American buyers, electric cars could soon cost more. For businesses, the message is clear: rely less on subsidies, and more on what you can build and sell yourself.

All figures and claims come from Tesla’s official filings and public U.S. government statements as of July 2025.

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