Tesla shares fall 8%: Investors rattled after Musk criticises Trump’s tax bill; spat turns ugly

Tesla shares plunged over 8% on Thursday as tensions between US President Donald Trump and Tesla CEO Elon Musk escalated, leaving investors concerned about the future of Musk’s vast business empire. The sharp decline was triggered instead by a bitter public spat between the two high-profile figures. Musk criticised the president’s recent tax bill, describing it on his social media platform X as a “disgusting abomination” that undermines cost-cutting efforts led by the department of government efficiency (DOGE), a team Musk has been closely involved with. Trump retaliated by suggesting Musk’s anger stemmed from the bill’s removal of tax incentives for electric vehicle (EV) purchases, accusing Musk of souring their previously friendly relationship. “Look, Elon and I had a great relationship. I don’t know if we will anymore,” Trump said, quoted by Reuters. “He said the most beautiful things about me. And he hasn’t said bad about me personally. That’ll be next. But I’m very disappointed.” Musk, who is also the largest Republican donor in the 2024 election campaign, has been gradually distancing himself from White House activities, focusing more on his companies after facing backlash and protests related to Tesla. The fallout has impacted Tesla’s sales in key markets including Europe, China and California, despite growing overall demand for EVs. “Elon’s politics continue to harm the stock. First he aligned himself with Trump which upset many potential Democratic buyers. Now he has turned on the Trump administration,” said Tesla shareholder Dennis Dick, chief strategist at Stock Trader Network. Beyond Tesla, Musk’s other ventures such as SpaceX and Starlink, dominant players in commercial launches and satellite internet, have also come under scrutiny due to his political entanglements. These businesses benefit from regulatory approvals, often eased by Musk’s government ties. Since May 27, Tesla shares have dropped 12%, accelerating on Thursday. This volatility followed a roller-coaster ride after Musk endorsed Trump in July 2024, when the stock surged 169% before tumbling 54% amid a wave of protests and market uncertainty. Despite the turmoil, Tesla remains the world’s most valuable automaker, valued at around $1 trillion — far ahead of Toyota’s $290 billion market cap. However, its shares now trade at a staggering 140 times projected profits, a steep premium compared to other tech giants such as Nvidia. Tesla shares are down 22% so far this year, reflecting investor jitters over the company’s political entanglements and looming regulatory changes that threaten its bottom line.