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A fresh wave of political tension between President Donald Trump and Elon Musk sent shockwaves through the market on Tuesday, knocking Tesla shares down by over 4%. The drop followed Trump's public call to review and potentially slash federal subsidies that have long supported Musk's ventures.
In a sharply worded post on Truth Social, Trump declared, "Elon may get more subsidy than any human being in history, by far," adding that "without subsidies, Elon would probably have to close up shop and head back home to South Africa." The president further suggested that the Department of Government Efficiency (DOGE), once headed by Musk, should investigate the billions flowing to Musk's companies. "BIG MONEY TO BE SAVED!!!" he wrote.
Trump's remarks coincided with Musk's renewed criticism of the GOP-backed tax and spending bill. On social platform X, Musk posted, "I am literally saying CUT IT ALL. Now," underscoring his disapproval of a bill that would slash green energy support while increasing the federal deficit. Musk had previously accused lawmakers of hypocrisy, warning: "They will lose their primary next year if it is the last thing I do on this Earth."
The timing of Trump's attack coincides with a volatile moment for Tesla. The company is expected to report underwhelming Q2 delivery numbers on Wednesday, and analysts warn that cuts to EV credits could further weaken performance. Tesla reported $2.8 billion in regulatory credits in FY 2024, while SpaceX, Musk's aerospace venture, holds around $22 billion in federal contracts.
"Elon can lose a lot more than just the EV mandate," Trump told reporters Tuesday, doubling down on earlier threats. When asked whether deportation was on the table, the president cryptically replied, "We'll have to take a look."
Longtime investor Gary Black, who recently sold Tesla shares, noted, "Not sure why @elonmusk didn't see this coming as a result of him speaking out against Trump's bill."
While Musk once served in Trump's cabinet as head of DOGE before stepping down in May, their alliance has unraveled swiftly. The fallout already erased $150 billion in Tesla's market value earlier in June before shares briefly recovered.
With Elon pushing back harder than ever and Trump holding the fiscal axe, investors are bracing for further turbulence. As Gene Munster of Deepwater Asset Management observed, "The substance of Tesla's valuation is progress toward autonomy. But that progress depends on regulation, and right now, politics is getting in the way."
