Tesla's (TSLA) shares take a nosedive in response to escalating conflict between Musk and Trump

Tesla's (TSLA) shares take a nosedive in response to escalating conflict between Musk and Trump

The ongoing feud between President Donald Trump and tech mogul Elon Musk, which began in June 2025, has introduced significant tensions that could impact both Tesla and SpaceX.

The dispute escalated when Musk, a vocal critic of Trump's tax and spending legislation, publicly denounced it as a "disgusting abomination." This public denouncement followed Trump's proposal to roll back electric vehicle (EV) tax credits, a move that Musk opposes.

The fallout between the two leaders has had immediate consequences for SpaceX. The company announced its intention to decommission the Dragon 2 spacecraft, the only operational American crewed vehicle capable of docking with the International Space Station. This move, while later retracted, hints at potential operational disruptions for SpaceX should tensions continue. Moreover, Trump threatened to cut government contracts with Musk-related companies, a move that could significantly affect SpaceX given its substantial government and NASA contracts.

For Tesla, the dispute revolves mainly around EV policies. Musk’s opposition to Trump's "EV mandate" and Trump's position on ending subsidies put Tesla at the centre of a policy conflict that could influence Tesla's market competitiveness, particularly if government incentives are removed. Musk's vocal opposition to Trump's political allies and legislation may also indirectly impact Tesla's business environment through regulatory or legislative channels.

However, Musk has financially supported Trump and Republican super PACs with $15 million, adding complexity to their relationship and potentially tempering immediate negative impacts on Musk’s businesses.

Musk's creation of a new political party—the America Party—signals a potential longer-term shift in his political strategy that could influence regulatory and political support for Tesla and SpaceX. This new party aims to reshape the midterm elections and challenge traditional Republican policies, which Trump continues to lead.

The feud has also had a direct impact on Tesla's stock market performance. On Thursday, Tesla shares plunged more than 14%, wiping out over $150 billion in market capitalization. The stock continued its downward trend in after-hours trading, closing at $278.40—a significant drop from $362 just on Tuesday.

The feud's implications for national security are also a cause for concern. Starlink, another SpaceX project, provides crucial connectivity for the U.S. military and various international partners. The potential withdrawal of federal contracts could pose a risk to this critical service.

In summary, the feud between Trump and Musk poses risks of government contract reductions for SpaceX and regulatory challenges for Tesla. Musk’s political moves and financial support reflect a complicated dynamic that could reshape the regulatory and political landscape affecting both companies in coming years.

1. The dislike between President Donald Trump and tech entrepreneur Elon Musk, initially sparked in June 2025, has extended beyond personal relations and could potentially influence not only their respective businesses – finance, politics, and technology – but also general-news topics, such as tax and spending legislation, EV policies, and regulatory adjustments.
2. The financial ties between Elon Musk and President Trump, established through Musk's $15 million donation to Trump and Republican super PACs, offer a promising perspective for maintaining a stable environment for SpaceX and Tesla in the face of their ongoing feud, as well as potentially influencing future regulatory and political landscapes.

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