Tesla's Stock Plummets 14.26% Amid Trump-Musk Feud Over Policy Disagreements

In June 2025, the global community witnessed an unprecedented clash between Donald Trump and Tesla CEO Elon Musk. The conflict, which unfolded over 48 hours through social media exchanges, involved policy disagreements, personal attacks, and threats to commercial interests, resulting in a significant drop in Tesla's market value. This dramatic shift from allies to adversaries highlighted the fragility of U.S. political and business relationships.

The catalyst for the rift was the "Big and Beautiful" bill, which was passed by the U.S. House of Representatives on May 22. This bill included a 40 billion dollar tax cut plan, reduced subsidies for electric vehicles and clean energy, and increased military and border security spending. Musk criticized the bill, stating that it would accelerate U.S. bankruptcy and failed to meet the 16 billion dollar spending reduction promise made during his tenure as the government efficiency committee head. The bill also revoked Musk's nomination for NASA administrator, further fueling the tension. Trump, in response, accused Musk of being aware of the policy changes and suggested that the cancellation of the electric vehicle mandate was the root cause of Musk's opposition.

The conflict escalated as both parties employed various strategies to gain the upper hand. Trump threatened to terminate SpaceX's 3 billion dollar government contract, which handles 78% of NASA's manned space missions. Musk retaliated by announcing the retirement of the Dragon spacecraft, which would have stranded seven astronauts at the International Space Station. However, Musk later retracted his statement, and SpaceX's stock price stabilized. Musk also released a controversial tweet suggesting Trump's involvement in a sex scandal, which garnered 120 million views and prompted a call for an investigation by the House Democratic leader. Trump, in turn, accused Musk of creating a distraction due to personal financial losses.

Despite the intense back-and-forth, signs of de-escalation began to emerge. Musk deleted the controversial tweet and shared Trump's statement on the Los Angeles riots, signaling a willingness to ease tensions. This move helped stabilize Tesla's stock price, which had previously plummeted by 14.26%. Additionally, Trump's announcement to retain SpaceX's 12 billion dollar "Starlink" government contract further eased the situation. Musk responded with a heart emoji to Trump's congratulatory tweet, and Tesla's stock price in Frankfurt rose by 2.7%.

The underlying dynamics of this conflict reveal the delicate balance between power and capital in the U.S. Musk's 275 million dollar investment in the 2024 election did not translate into significant policy influence, while Trump faced pressure to balance the interests of traditional energy groups and tech giants. The conflict underscored the interconnectedness of politics and business, as well as the potential for high-stakes disputes to impact market stability. The temporary truce between Trump and Musk, driven by mutual interests, highlighted the need for ongoing dialogue and cooperation to address structural issues in U.S. politics and business.