Tesla (TSLA) shares are bracing for heightened volatility following the dramatic public fallout between CEO Elon Musk and President Donald Trump, a feud that has already erased over $150 billion in market value and elevated the electric vehicle giant’s political and regulatory risk profile.
The conflict began when Musk sharply criticized Trump’s flagship tax and spending bill, calling it a “disgusting abomination” on social media. Trump retaliated by threatening to revoke billions in government contracts and subsidies for both Tesla and SpaceX, sparking a 14% plunge in Tesla shares—the largest single-day loss in the company’s history.
The stock, which had previously surged on hopes of favorable policies under Trump, now finds itself at the center of a political storm, with its year-to-date decline exceeding 24%, making it the worst-performing ‘Magnificent Seven’ tech stock in 2025.
Analysts warn that the Musk-Trump feud introduces significant new sources of uncertainty for Tesla. Trump’s threats to eliminate EV tax credits and delay regulatory approvals for Tesla’s highly anticipated robotaxi service could have a direct impact on the company’s future profitability and growth. According to JPMorgan, the removal of EV tax credits alone could cost Tesla $1.2 billion in annual profit. Further, the U.S. Department of Transportation has already paused new autonomous vehicle testing approvals, raising concerns about the timeline for Tesla’s next-generation products.
Investor sentiment has soured, with retail and institutional traders alike expressing caution. Social media platforms and trading forums reflect a sharp rise in bearish sentiment, and message volume around TSLA has more than doubled as traders debate the fallout.
Some analysts, including those at Wedbush, see the stock as oversold and highlight Tesla’s long-term strengths in AI and robotics, but others caution that brand damage and political headwinds could persist, especially if Musk’s political involvement continues to alienate consumers and policymakers.
Ultimately, Tesla’s stock now sits at a crossroads. The resolution of the Musk-Trump dispute, clarity on regulatory approvals for robotaxis, and stabilization of U.S.-China trade relations will be critical for restoring investor confidence. Until then, market watchers should expect continued swings in TSLA’s share price as political headlines and policy developments drive sentiment.
