Tesla Faces 5% Dip as Musk-Trump Ceasefire Crumbles

• Tesla Inc. (TSLA) shares dropped 4.54% to $303.25 in early Tuesday trading, following renewed tensions between Elon Musk and President Donald Trump over the proposed One Big Beautiful Bill Act. Musk has criticized the bill, claiming it would add $5 trillion to the federal deficit.
• Musk’s criticism of the spending bill and his call for a new political party have heightened tensions, with Trump threatening to cut subsidies for Musk’s companies, including Tesla and SpaceX.
• The dispute, amplified on social media, underscores Tesla’s vulnerability to political and policy shifts, particularly regarding green energy subsidies, impacting investor confidence.

The public clash between Tesla Inc. (TSLA) CEO Elon Musk and President Donald Trump has reignited, sending Tesla shares tumbling 4.54% to $303.25 in early trading on Tuesday. The renewed tension stems from Musk’s vocal opposition to the One Big Beautiful Bill Act, a proposed spending bill navigating the U.S. Senate that Musk claims will balloon the federal deficit by $5 trillion. This dispute, amplified across social media, underscores the complex interplay between political rhetoric, corporate interests, and market dynamics.

Musk, who also leads SpaceX and owns the social-media platform X, has been unrelenting in his critique of the legislation, which he argues undermines fiscal responsibility. In a series of posts on X, he warned that senators backing the bill risk losing their primaries, stating, “Every member of congress who campaigned on reducing government spending will lose their primary next year if it is the last thing I do on Earth.” His remarks reflect a broader frustration with government spending, a stance that aligns with his earlier support for Trump during the 2024 campaign but now puts them at odds. Musk escalated his rhetoric on Monday, suggesting on X the creation of “a new political party that actually cares about the people,” signaling a potential shift in his political engagement.

President Trump, in response, took to Truth Social to threaten punitive measures against Musk’s enterprises. In a late-night post, he suggested the federal government should reconsider subsidies for Musk’s companies, stating, “Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa. No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE. Perhaps we should have DOGE take a good, hard, look at this? BIG MONEY TO BE SAVED!!!” The mention of DOGE, a reference to the Department of Government Efficiency often associated with Musk’s advisory role, adds a layer of irony to the dispute.

The proposed legislation at the heart of this feud is poised to reduce government support for green energy and electric vehicles, sectors central to Tesla’s business model. While the bill’s specifics remain under debate, its potential to increase the federal deficit relative to current law has drawn Musk’s ire, given his recent advocacy for fiscal restraint. This marks a departure from the temporary détente between Musk and Trump earlier in 2025, when Tesla’s stock had recovered over 11% since June 5 following a prior spat in early June that also triggered a sell-off.

The market’s reaction to this latest episode highlights Tesla’s sensitivity to political headwinds. Investors are wary of potential policy shifts that could erode Tesla’s competitive edge, particularly if subsidies for electric vehicles are curtailed. Tesla has benefited significantly from federal and state incentives, which have bolstered its growth in the electric vehicle market. Any move to reduce these supports could pressure Tesla’s margins, especially as competition intensifies from legacy automakers and emerging players in the EV space.

Musk’s broader influence, spanning Tesla, SpaceX, and X, amplifies the stakes of this conflict. His role as a government advisor and his ownership of X, a platform shaping public discourse, give him a unique pulpit to challenge policy decisions. However, his aggressive stance risks alienating political allies, as evidenced by his criticism of the Republican Party. This dynamic could have longer-term implications for Tesla’s government contracts and regulatory environment, particularly for SpaceX, which relies heavily on federal partnerships for its space exploration and satellite programs.

The feud also reflects broader tensions in the U.S. political and economic landscape. The debate over government spending, green energy subsidies, and fiscal policy is likely to intensify as the 2026 midterms approach. Musk’s call for a new political party, while provocative, underscores a growing dissatisfaction with traditional political alignments, potentially influencing voter sentiment and policy priorities.

For now, Tesla investors are left navigating the fallout of this high-profile dispute. The 4.54% drop in TSLA stock to $303.25 reflects immediate market concerns, but the broader trajectory will depend on how Musk and Trump resolve, or escalate, their public standoff. With Musk doubling down on his push to “CUT IT ALL,” as stated on X, and Trump signaling a willingness to target Musk’s business interests, the intersection of politics and corporate strategy remains a critical factor for Tesla’s future performance.

WallStreetPit does not provide investment advice. All rights reserved.

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