Tesla stock tumbles amid escalating Musk-Trump feud over subsidies

Tuesday 01 July 2025 - 16:10

By: Dakir Madiha

Tesla stock tumbles amid escalating Musk-Trump feud over subsidies

Tesla’s stock price plunged more than 5% in premarket trading on Tuesday as tensions between President Donald Trump and billionaire Elon Musk intensified. The feud, which has centered on government subsidies and congressional spending, has shaken investor confidence, pushing Tesla shares below $300 for a brief period.

Trump targets Musk’s subsidies

President Trump has called for a review of federal subsidies provided to Musk’s companies, including Tesla and SpaceX, by the Department of Government Efficiency (DOGE)—a department Musk had previously led. Trump claimed Musk’s businesses have received more government support “than any human being in history” and suggested that cutting these subsidies could save taxpayers significant amounts.

On Truth Social, Trump said that without federal support, Musk’s companies would “close up shop” and that the billionaire might have to “head back home to South Africa.” He also hinted that DOGE should investigate the costs of these subsidies, saying there is “BIG MONEY TO BE SAVED.”

Musk fired back on X, the social media platform he owns, declaring, “CUT IT ALL. Now.” He also reiterated his opposition to Trump’s electric vehicle (EV) mandates, which he described as “ridiculous.”

Stock fallout and financial implications

The feud has taken a toll on Tesla’s stock, which has now dropped over 9% since the public spat began last month. On Tuesday, shares settled at $301.10, reflecting a 5.2% decline. Analysts warn that Musk’s net worth, currently estimated at $406.5 billion, could see a significant dip if Tesla’s market performance continues to falter.

This is not the first time Tesla’s stock has been volatile during the Trump-Musk feud. Last month, shares fell below $285 before recovering slightly as relations between the two appeared to improve temporarily.

Political threats escalate

The feud escalated after Musk criticized Trump’s massive congressional spending package and threatened to fund primary challenges against Republicans who support it. Musk also floated the idea of forming a new political group, the “America Party,” if the bill passes.

“If this insane spending bill passes, the America Party will be formed the next day,” Musk wrote on X.

Trump, in turn, suggested that he might consider deporting Musk. When asked by reporters outside the White House if such an action was on the table, Trump said, “I don’t know. We’ll have to take a look.”

He added cryptically, “We might have to put DOGE on Elon. You know what DOGE is? DOGE is the monster that might have to go back and eat Elon.”

Broader implications

The feud highlights a growing rift between Musk and the Republican Party, which he has historically aligned with on issues such as deregulation and tax policy. However, Musk’s opposition to Trump’s legislative agenda and his threat to fund political challengers signal a shift in his previously amicable relationship with the GOP.

As Tesla and SpaceX continue to rely on federal subsidies for their operations, the ongoing conflict raises questions about the future of Musk’s ventures and their standing with the U.S. government. For now, the feud has left Tesla’s investors and political observers bracing for further fallout.