Tesla Suffers Historic Loss as Musk-Trump Rift Intensifies

Tesla shares plummeted by 14% on Thursday, leading to a staggering $152 billion erosion in market capitalization. This marks Tesla’s worst single-day loss to date and pushed its valuation below the $1 trillion mark, closing at $916 billion. The stock has now fallen in four of the last five trading sessions.

Public Dispute Between Musk and Trump Sparks Market Panic

The dramatic drop followed a high-profile public spat between Tesla CEO Elon Musk and U.S. President Donald Trump. The clash stemmed from Musk’s criticism of the government’s new spending bill, which Trump sharply responded to by threatening to withdraw government contracts associated with Musk’s companies.

“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!” — Trump on Truth Social

“Elon and I had a great relationship. I don’t know if we will anymore. I was surprised.” — Trump said from the Oval Office

He also suggested that Musk was unhappy about the exclusion of electric vehicle (EV) credits in the new legislation.

H3: Musk Retaliates with Political Claims

In a swift response, Musk posted “Whatever” on X (formerly Twitter) while U.S. President Donald Trump was addressing the media. He also added:

“Without me, Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate.” — Elon Musk on X

Musk has recently adopted a more vocal political stance. He branded the new budget bill a “disgusting abomination” and urged voters to challenge lawmakers who supported it in future elections.

From Collaborator to Critic – Musk’s Changing Role

This feud represents a stark shift from Musk’s earlier cooperation with Trump’s administration. He had previously served as the head of the Department of Government Efficiency (DOGE), a special advisory group, a role he exited just last Friday.

Tesla Stock Wiped Despite May Gains

Tesla's stock had risen 22% in May, despite reporting weaker-than-expected sales. However, since the onset of the Musk-Trump dispute, Tesla shares have plunged nearly 18% this week alone. For the year so far, the stock has dropped around 30%, a steep decline from the $488.54 peak recorded on December 18.

Conclusion

Tesla’s historic market crash underscores the profound impact that political discourse and leadership conflicts can have on financial markets. The sharp 14% plunge, translating to a $152 billion loss in value, not only represents Tesla’s worst single-day drop but also highlights growing investor concerns about Elon Musk’s increasingly political stance.

What began as a disagreement over EV credits and government spending spiraled into a full-blown public fallout with former ally, President Donald Trump—bringing Tesla’s market cap below the $1 trillion milestone. Musk’s social media rebuttals and outspoken criticism of the budget bill further fueled market volatility.

Despite strong stock performance in May, the recent decline has nearly erased those gains, bringing Tesla’s year-to-date loss close to 30%. As tensions rise and regulatory uncertainty looms, both Tesla’s stock trajectory and Musk’s political alliances remain under close scrutiny. Going forward, investor confidence may hinge on Musk’s ability to separate corporate strategy from political conflict.