Tesla stock (TSLA) dropped nearly 5% Tuesday as tensions between CEO Elon Musk and President Trump reignited, with the president threatening to strip away government subsidies benefiting Musk’s various companies, including Tesla and SpaceX (SPAX.PVT).
“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,” Trump wrote early Tuesday on Truth Social, his social media platform.
“No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE,” he added. “Perhaps we should have DOGE take a good, hard, look at this? BIG MONEY TO BE SAVED!!!”
The sell-off followed Musk’s public criticism of Trump’s recently passed tax and spending package. Over the weekend, Musk attacked the “big, beautiful” megabill, which advanced in the Senate with amendments that would phase out electric vehicle tax credits — a key benefit for Tesla buyers — sooner than expected and increase the bill’s price tag by an additional $1 trillion.
The Senate approved the megabill Tuesday, bringing it one step closer to becoming law. Analysts estimate that eliminating the EV credit could wipe out $1.2 billion from Tesla’s annual profits.
At the same time, SpaceX has secured over $21 billion in federal contracts, according to U.S. government spending data.
In one of several posts on X, Musk called the bill “utterly insane and destructive [with] handouts to industries of the past while severely damaging industries of the future.” He continued criticizing the bill throughout the trading day and, for the second time in recent weeks, floated the idea of forming a new political party.
Tesla shares also fell 1.9% on Monday as the Senate kicked off a prolonged “vote-a-rama” on amendments to the bill, which carried into Tuesday morning.
Later that night, Musk posted an AI-generated image of Pinocchio stamped with the word “liar,” captioning it: “Anyone who campaigned on the PROMISE of REDUCING SPENDING , but continues to vote on the BIGGEST DEBT ceiling increase in HISTORY will see their face on this poster in the primary next year.”
Trump’s response on Truth Social came hours later. “Elon Musk knew, long before he so strongly Endorsed me for President, that I was strongly against the EV Mandate,” Trump wrote.
The exchange rekindled a public feud between Trump and Musk that previously wiped more than $150 billion in market value from Tesla in a single day back in early June. That dispute featured a barrage of social media insults between the two and highlighted the market’s sensitivity to what analysts have called Tesla’s “Musk premium.”
Musk has been especially vocal about Trump’s megabill since resigning from his role at the Department of Government Efficiency (DOGE), the federal agency created to slash government debt through aggressive spending cuts — a mission that ultimately failed.
“The jabs between Musk and Trump will continue as the Budget rolls through Congress but Tesla investors want Musk to focus on driving Tesla and stop this political angle … which has turned into a life of its own in a roller coaster ride since the November elections,” Wedbush analyst Dan Ives wrote in a note Tuesday morning.
“At the end of the day being on Trump’s bad side will not turn out well … and Musk knows this and Tesla investors want this back and forth to end,” Ives added.
Adding to Tuesday’s pressure, new data showed Tesla’s sales fell for the sixth consecutive month in Sweden and Denmark. Investors are now awaiting Tesla’s second-quarter delivery report, expected Wednesday. Wall Street forecasts a year-over-year decline of 11%.
Pump Radar
Stock Alerts