Tesla Inc.’s stock fell 14.2%, erasing $153 billion in market value, marking the largest single-day decline in its history amid a public dispute between CEO Elon Musk and President Donald Trump.
As The Guardian reported, the drop in Tesla stock in 2025, driven by Trump’s threats to reduce federal contracts and subsidies for Tesla and SpaceX, resulted in $4 billion in gains for short sellers.
The conflict intensified when Musk referred to Trump’s tax and spending bill as a “disgusting abomination” on X, which led Trump to threaten Tesla and SpaceX with the loss of their government contracts, valued at nearly $20 billion since 2008. In response, Musk raised questions about Trump’s connections to Jeffrey Epstein, further escalating their feud, as reported by Reuters. Tesla’s stock, which has dropped 24.9% year-to-date from its peak in December, reflects investor concerns about regulatory risks.
Watch Tesla’s shares drop 14% today as Elon Musk and President Trump’s simmering feud erupts 📉
The rout erased about $150 billion from the EV maker’s market value, the stock’s biggest decline since March 10 pic.twitter.com/NWKayqJpsT
— Bloomberg Opinion (@opinion) June 5, 2025Trump-Musk Feud and Tesla’s Future
Analysts provided differing perspectives on the situation. Wayne Kaufman from Phoenix Financial Services described the feud as “idiotic,” emphasising that Tesla depends more on Musk’s vision than its fundamentals.
In contrast, Adam Sarhan of 50 Park Investments cautioned that ongoing conflict could harm earnings, labelling the stock as “pure gambling,” according to Bloomberg.
According to Forbes, Ross Gerber, an investor in Tesla, sold shares and criticised Musk’s actions as a “disaster. ” On the other hand, Tom Orlik from Bloomberg Economics contended that targeting Musk’s companies threatens U.S. tech leadership.
Read: Trump and Musk Clash Over Tax Bill, Sparking Public Feud in 2025
The Tesla market value loss compounds existing woes, with EV sales declining in Europe and China. Musk’s political controversies, including his DOGE role, have spurred protests. The SpaceX contract threat looms as NASA relies on SpaceX’s Dragon spacecraft. Despite a planned robotaxi launch in Austin, regulatory hurdles persist.
The Tesla stock drop in 2025 and the Trump-Musk feud highlight Musk’s outsized influence on Tesla’s valuation, with the SpaceX contracts threat and short sellers’ gains signalling volatility. As investors navigate the fallout, Tesla’s future hinges on resolving political and operational challenges, drawing global attention to its pivotal role in 2025’s tech landscape.
