Tesla Shares Plummet 9% Amid Musk-Trump Tensions Over Budget Bill
Key Developments
Shares of Tesla experienced a significant drop of 9% on Thursday as CEO Elon Musk and former President Donald Trump engaged in a public spat regarding a spending bill currently under consideration in Congress. This decline follows a remarkable 22% rally in May, during which Musk concluded his role as head of the Department of Government Efficiency (DOGE). The drop in Tesla shares reflects investor concerns over Musk’s public disagreements.
The Exchange of Barbs
The tension escalated when Trump addressed the media from the Oval Office, suggesting that Musk was upset over the exclusion of electric vehicle (EV) credits from the spending bill. “Elon and I had a great relationship. I don’t know if we will anymore,” Trump remarked, expressing surprise at Musk’s reaction. Musk quickly responded with a dismissive “Whatever,” and took to social media to assert, “Without me, Trump would have lost the election, Dems would control the House, and the Republicans would be 51-49 in the Senate.” Consequently, Tesla shares drop from the fallout was notable.
Musk’s Strong Opposition
Musk, who is currently the world’s richest man, has recently intensified his criticism of the budget bill, labeling it a “disgusting abomination.” He has threatened to support primary challenges against lawmakers who vote in favor of the bill, marking a notable shift in his previously supportive stance toward the Trump administration. Investors are wary as Musk’s stance correlates with Tesla shares dropping.
Stock Market Impact
The decline in Tesla’s stock comes after a week of volatility, with shares down 12% as Musk’s criticisms of the budget bill gained traction. Despite a strong performance in May, Tesla’s share price has dropped more than 20% this year and remains significantly below its peak of $488.54 reached in December.
Broader Challenges for Tesla
Beyond the political turmoil, Tesla faces fundamental challenges, including declining sales in key European markets and a tarnished brand reputation in the West. The company is also under pressure to launch its long-awaited driverless ride-hailing service in Austin, Texas, a move that comes as competitors like Waymo are already operating successful commercial robotaxi services in the area, further impacting the drop in Tesla shares.
Conclusion
As tensions between Musk and Trump continue to unfold, the implications for Tesla’s stock and its future remain uncertain. With Musk’s outspoken nature and the evolving political landscape, investors and industry observers will be closely monitoring how these developments impact the electric vehicle market and Tesla’s position within it since the dropping of Tesla shares could signal broader concerns.
