Tesla stock tanks 8% as Elon Musk-Donald Trump clash escalates: Political drama clouds EV giant’s outlook, Musk’s third-party move sparks investor jitters
Tesla shares plunged 8% at the opening bell on Monday after a renewed political spat between CEO Elon Musk and President Donald Trump reignited investor concerns about the electric vehicle maker’s future, particularly its reliance on federal support.The fresh sell-off followed Musk’s weekend announcement that he was forming a third political party, in protest against a recently passed Republican spending bill. Musk, once a prominent Trump ally and donor, claimed the legislation would “kill jobs” and stifle innovation, AP reported.Trump fired back in a social media post on Sunday, saying the billionaire entrepreneur had “gone off the rails” in recent weeks.Federal subsidies in spotlightInvestors fear that escalating tensions between Musk and Trump could lead to retaliatory action affecting Tesla, SpaceX, and Musk’s other ventures, all of which benefit from US government contracts and subsidies.“With the autonomous future ahead and the AI Revolution in full force, Musk/Tesla do not need to keep poking the bear,” said Dan Ives, analyst at Wedbush Securities, in a client note late Sunday, AP quoted. “Trump can create more hurdles for Musk/Tesla/SpaceX over the coming years if this political battle gets nastier heading into mid-terms in 2026,” he warned.Politics, perception, and pressureTesla shares, which peaked at $479.76 on December 17, have lost about 40% of their value since then. Monday’s drop wiped out $26 per share, bringing Tesla’s stock to $289.75, amid broader weakness in European and US markets.Market watchers say Tesla’s share price has been hit by more than just politics. Analysts point to growing global competition in the EV space, especially in China, and a consumer backlash stemming from Musk’s increasingly vocal right-wing affiliations and his ties to controversial groups such as Germany’s AfD.Musk’s alignment with the Trump administration during last year’s campaign and his public political positioning have added fuel to the ongoing volatility, with Tesla’s brand perception taking a hit, particularly among more liberal consumers.As the 2026 midterms approach and Musk steps deeper into political territory, investors are bracing for more uncertainty around Tesla’s trajectory — and possibly more turbulence in the stock.
