Tesla stock plummeted over 7% on Tuesday after President Donald Trump reignited his feud with CEO Elon Musk, threatening to strip away federal subsidies and contracts from Musk-led companies in retaliation for the tech billionaire’s vocal criticism of his administration’s fiscal policies.
The renewed political crossfire is unnerving Tesla investors, who only recently began to regain confidence in the company’s direction after Musk had announced a pause from overt political activity and his departure from Trump’s controversial Department of Government Efficiency, DOGE.
The spark for this latest escalation came after Musk, in a scathing post on X, slammed Trump’s new spending bill—dubbed the “One Big, Beautiful Bill”—which includes sweeping tax reforms and record federal expenditures.
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Musk wrote: “It is obvious with the insane spending of this bill, which increases the debt ceiling by a record FIVE TRILLION DOLLARS, that we live in a one-party country — the PORKY PIG PARTY!! Time for a new political party that actually cares about the people.”
Just hours later, Trump fired back on Truth Social, describing Musk as the “biggest subsidy recipient in history” and threatening to eliminate federal aid to Tesla, SpaceX, and other Musk ventures. He suggested Musk “would have to close up shop and head back home to South Africa” without government support.
“Perhaps we should have DOGE take a good, hard look at this? BIG MONEY TO BE SAVED!!!” Trump added.
Investors Lose Patience
The public clash reignited long-held concerns among shareholders about Musk’s increasingly political posture—concerns that had briefly faded earlier this year when Musk declared he was leaving DOGE and refocusing on Tesla and his AI startup, xAI. That announcement led to a temporary rebound in Tesla stock, offering investors a glimmer of stability. But the relief has now vanished.
Several Tesla shareholders took to social media to vent their frustration, making it clear that Musk’s return to political combat could have long-term implications for Tesla’s valuation.
Vincent, a shareholder who disclosed owning a significant number of Tesla shares, wrote, “As an investor, I really don’t like that Elon Musk is constantly involved in political discussions. This is my opinion—you don’t have to agree with it, but I don’t care.”
Another, who said they owned 1,850 Tesla shares and multiple Tesla vehicles, expressed his frustration over Musk’s return to a political feud.
“I may ditch my 1,850 $TSLA shares. I can’t handle the CEO starting wars with the administration as the head of a company. I still love the product (Own 4 Teslas and Tesla Solar), but I need the investments in something more stable. Talk me out of it,” he said.
Phil Trubey, another longtime Tesla investor, voiced deeper concerns about governance and the inherent conflict between Musk’s political ambitions and his role as CEO.
“As a Tesla shareholder, this is the last thing I want in a CEO. Someone who proclaims that jumping deep into political campaigns is his #1 priority. I don’t begrudge Elon from getting involved in politics, knock yourself out man. But you can’t do it and also be an effective CEO since the conflicts are too great. The very people Elon is targeting have the power to massively disrupt Tesla,” he said.
Tesla’s exposure to federal subsidies is substantial. The EV giant benefits from a range of U.S. tax credits, particularly the federal electric vehicle tax credit that could provide up to $7,500 per car. With an estimated $1.2 billion in annual subsidies on the line, Trump’s threat to end all forms of government support is far from symbolic. The risk also extends to SpaceX, which has secured over $21 billion in federal contracts for satellite launches, defense programs, and NASA operations.
Musk’s latest criticism of Trump’s bill also comes amid reports that SpaceX has been under informal review by some federal agencies over compliance and labor concerns—raising speculation that Musk’s feud with the administration could attract deeper scrutiny of his companies.
Market Consequences
Tesla’s share decline on Tuesday follows months of volatility. With the political narrative now dominating headlines once again, analysts warn that the “Musk premium” built into Tesla’s stock price may continue to decline.
Dan Ives, a well-known Tesla bull and analyst at Wedbush, wrote in a note Tuesday: “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 rollercoaster ride since the November elections.”
Tesla’s latest delivery report is due this week, with analysts expecting an 11% drop in global deliveries year-over-year. Sales in key European markets like Sweden and Denmark have already slipped for six straight months, while price cuts in China have failed to fully revive demand.
Musk’s return to open political warfare with Washington has injected new uncertainty at a time when Tesla is navigating growing competition from Chinese EV manufacturers and facing investor skepticism about long-term profitability in a maturing market.
The feud may still escalate. Trump has reportedly asked aides to explore the scope of federal exposure to Musk’s businesses, while Musk has hinted at further political interventions—possibly even funding primary challenges against Republicans who vote for Trump’s spending bill.
Against the possibility of further escalation, Tesla shareholders seem to be sending a message that enough is enough.