Rising tensions between the White House and Silicon Valley send shockwaves through the markets.
June 5, 2025 — Tesla stock took a dramatic nosedive on Thursday, tumbling more than 16% on Wall Street, after a public and acrimonious dispute erupted between Elon Musk and U.S. President Donald Trump.
The clash, rooted in deep political differences and explicit economic threats, underscores the growing strain between the federal government and America’s tech giants.
By 7:20 p.m. GMT (8:20 p.m. Tunisian time), Tesla shares were trading at $276.94, down 16.60% for the day.
The sharp drop wiped out over $170 billion in market capitalization, dragging the automaker’s valuation below the symbolic $1 trillion threshold.
The sell-off followed a series of heated exchanges between President Trump and Elon Musk, who once served as an economic adviser to the president but is now in open opposition to the administration.
At the heart of the dispute lies Trump’s latest budget mega-plan—hailed by the president as a “great and beautiful law” but denounced by Musk as an “abomination.”
On his social platform Truth Social, President Trump expressed anger and “disappointment” toward Musk, hinting that the Tesla and SpaceX CEO could soon lose the government subsidies and contracts that support his companies.
“The easiest way to save billions and billions of dollars in our budget would be to cancel Musk’s government subsidies and contracts,” Trump declared in a message that sent markets reeling.
Musk quickly hit back on his platform X, condemning what he called political manipulation.
Responding to Trump’s claim that Musk had been briefed on the budget details in advance, the billionaire tersely replied “False,” accompanied by a video he dismissed as “nonsense.” The highly personal nature of the spat quickly spilled beyond the political and economic arenas, directly impacting Tesla’s market standing.
The escalating rift between two of the most influential figures in American business and politics comes amid a period of heightened volatility for tech stocks.
The sector is already under pressure due to uncertainty around industrial policy—particularly related to electrification initiatives and green subsidies.
Investor reaction was swift, highlighting Tesla’s vulnerability to public statements involving federal incentives and leadership conflicts.
While no formal announcement has been made regarding the suspension of subsidies, Trump’s threat signals a major shift in federal-private sector relations.
It could have lasting repercussions for the U.S. electric vehicle industry.
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