Just when we thought the drama between Elon Musk and President Donald Trump was old news, think again.
Their high-stakes feud just got a fresh jolt, and yet again, it comes at the expense of Tesla stockholders.
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The richest political theater on Wall Street comes at a critical juncture for Tesla.
Just a week into its robotaxi rollout, Tesla’s already fielding mixed reviews and headaches from regulators.
Not to mention the deepening European slump, which complicates things even more.
Needless to say, Musk and his EV behemoth have plenty on their plate, and the nonstop soap opera with President Trump isn’t making things any easier.
The tangled Trump-Musk saga
It's hard to believe now, but a few months ago, Musk and Trump were a dynamic duo.
Their unlikely bromance began last year, when Musk dropped close to $300 million in backing Donald Trump’s reelection.
After quitting Trump’s advisory councils a few years ago over climate spats, Musk shook the world, playing “first buddy” to the president.
Related: Veteran analyst drops jaw-dropping Tesla stock target
By January 2025, President Trump made it official with the Department of Government Efficiency (DOGE), pushing Musk to slash red tape.
However, by May, we saw the cracks splitting open.
Musk was quick to blast Trump’s “Big Beautiful Bill” as “insanity,” quitting DOGE weeks later while citing business commitments.
President Trump hit back on Truth Social, threatening to slash Tesla’s and SpaceX’s federal perks.
Wall Street noticed fast, with Tesla crashing 14% on June 5, wiping out $150 billion in value. Despite rebounding from that event, Tesla stock is still down 21% year-to-date, performing the worst of the Magnificent 7.
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Beyond the drama, government subsidies have been a critical part of Tesla’s rise.
A $465 million DOE loan in 2010 kick-started its Fremont factory, while federal plug-in tax credits of up to $7,500 per car under the Inflation Reduction Act sweetened the deal for buyers.
Also, Tesla’s regulatory credit sales have quietly pushed its fundamentals forward in a big way.
To put things in perspective, since 2019, those credits alone have pulled in about $10 billion, constituting close to 30% of Tesla’s net income over the period.
Elon Musk’s Trump feud rattles Tesla stock as subsidy clash escalates
President Trump’s feud with Musk got hotter, fueled by billions in subsidies and a swelling U.S. deficit.
In a recent Truth Social post, Trump panned Musk for allegedly raking in more taxpayer cash than “any human being in history.”
He also warned that without billions in subsidies, Tesla and SpaceX may need to close up shop, with Musk having to head back home to South Africa.
Musk didn’t hold back either, firing back on X: “I am literally saying CUT IT ALL. Now.”
The clash comes as President Trump’s sweeping tax-and-spend proposal nears the finish line.
Related: Veteran Tesla bull drops surprising 3-word verdict on robotaxi ride
Musk has been critical of the bill, saying it adds an estimated $3.3 trillion to the federal deficit over the next decade, while choking the DOGE program’s efforts.
Also, in a fresh twist, Musk is threatening to unseat any lawmaker who backs the plan, vowing to fund primary challengers and potentially launching the “America Party” if the bill passes.
Meanwhile, Tesla’s European sales slide just got uglier.
June registrations tanked over 60% in the Nordics, with sales in Denmark down 61.6% year-over-year to just 1,282 new Teslas.
Results from Sweden were even worse, with sales down 64.4%.
Across the EU, May registrations slid 40.5% to 8,729 units as its Chinese counterparts in BYD make some massive inroads in the region.
Unsurprisingly, Tesla stock wrapped Monday at $317.66 after the latest Trump-Musk clash, down about 2%.
At the time of writing on July 1, during pre-market hours, the stock was off another 4.3% and sliding.
Related: Tesla's robotaxi rollout runs into trouble
