Shares of Elon Musk’s electric vehicle powerhouse took a nosedive on Thursday, losing more than 14 percent and wiping nearly $150 billion off its market value in a single day. The slide was fueled by mounting fears that a brewing political feud between Musk and President Donald Trump could cast a long shadow over Tesla’s future prospects.
The conflict ignited when Musk publicly claimed that Trump wouldn’t have been elected without his support. In response, Trump hinted at a darker strategy, suggesting he might target Musk’s companies Tesla and SpaceX by pulling the plug on federal subsidies and contracts. “The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,” Trump posted on his social media platform, Truth Social. “I was always surprised that Biden didn’t do it!”
This fiery exchange sent shockwaves through the markets, reversing a promising rally that had gained momentum over the past two months. Since Musk announced plans to test a driverless “robotaxi” service in Austin, Texas, investor optimism had been steadily building. Thursday’s decline, however, cast doubt on the company’s autonomous vehicle ambitions, which constitute a key pillar of Tesla’s long-term strategy.
Experts warn that Trump’s threats could slow down or even halt the regulatory momentum needed for Tesla’s self-driving cars to become mainstream in the United States. “There is a fear that Trump is not going to play Mr. Nice Guy when it comes to autonomous vehicles,” said Dan Ives, a senior analyst at Wedbush Securities. “The goal was to have robotaxis in 20 or 25 cities next year. If regulations tighten or delays occur, that timeline could be severely impacted.”
Beyond Tesla, the president’s remarks threaten Musk’s other ventures, notably SpaceX. Musk’s private aerospace firm has received billions of dollars in government contracts for launches, cargo missions, and astronaut transportation to the International Space Station. With SpaceX racing to develop a lunar-capable rocket for NASA’s upcoming moon mission, any reduction in government support could complicate those plans.
Musk’s relationship with Trump has also benefited SpaceX’s satellite internet arm, Starlink. During a recent trip to the Middle East with Trump, Musk announced that Saudi Arabia had approved Starlink for aviation and maritime use. Despite the political undertones, recent deals in countries like Bangladesh, Pakistan, and India have helped bolster Starlink’s global footprint, even as Trump’s tariffs and diplomatic pressures loom.
Financially, SpaceX has seen a meteoric rise, recently valuing the company at an estimated $350 billion up from just $210 billion a year ago thanks to private funding rounds and share sales. Meanwhile, Tesla’s stock initially soared following Musk’s support of Trump, hitting record highs in December 2023. But those gains waned amid Musk’s involvement in government cost-cutting initiatives, which cast a pall over Tesla’s reputation. The recent resurgence, driven by Musk’s renewed focus on Tesla’s autonomous ambitions, now faces an uncertain future amidst the political turbulence.
Thursday’s turmoil underscores how intertwined Musk’s business empire is with political currents. As investors brace for what’s next, the question remains whether these clashes will slow innovation or ignite a new chapter of resilience for Musk’s ambitious vision.
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