Tensions between former U.S. President Donald Trump and Tesla CEO Elon Musk shake the market, threatening the future of autonomous vehicles and key government subsidies for Tesla.
A heated spat between Donald Trump and Elon Musk has quickly escalated into a major crisis for Tesla.
The feud, which erupted on social media Thursday (June 6), immediately rattled the market, sending Tesla shares tumbling and raising serious concerns about the electric vehicle giant’s future.
Tesla stock plummeted by as much as 18% before closing down 14% on Thursday.
As of Friday midday, the stock remained under pressure, with nearly 10% lost in just two days of trading erasing tens of billions of dollars in market value.
According to Wedbush analyst Dan Ives, a longtime Tesla supporter, the rift between Trump and Musk opens the door to a potentially dramatic political shift against the company.
“There’s growing concern that Trump could turn from ally to adversary and create a tough regulatory environment for Musk in Washington,” Ives wrote in a note to investors.
Ives described the public clash between the two as “one of the most surreal Twilight Zone days we’ve seen in the market.”
The feud also raises alarms over Tesla’s future access to government support.
Analysts warn that if Trump returns to power, he could pressure regulators to delay or deny approval for key Tesla projects like its ambitious robotaxi service or full self-driving technology currently being tested in Austin, Texas.
“If full autonomous driving tech gets shut down, it would be a major blow to Tesla’s stock,” said Gordon Johnson, CEO of GLJ Research and a noted Tesla skeptic.
Tesla also relies heavily on revenue from selling carbon emission credits to other automakers. Last year alone, the company earned around $2.8 billion from this system.
However, Trump could attempt to dismantle state-level emissions standards, such as those in California, which could severely impact Tesla’s ability to profit from these credits.
Still, some analysts believe a reconciliation remains possible.
The two billionaires were recently seen exchanging praise during a meeting at the White House, and a full-blown political assault on Tesla might not benefit either party in the long run.
Seth Goldstein, an analyst at Morningstar covering the EV sector, argued that political drama tends to be overstated by investors.
“This might move the stock short-term, but bigger events for Tesla are coming later this year like the robotaxi launch which will be far more consequential,” he said.
Despite the volatility, Tesla remains a dominant player in the global EV market, with a strong lineup of vehicles and an extensive charging network.
Dan Ives remains cautiously optimistic: “We believe cooler heads will prevail today and through the weekend,” he said. “Let’s hope so.”