Tesla stock prices fell by more than 5% on Tuesday while investors became increasingly concerned about the ongoing public dispute between CEO Elon Musk and President Donald Trump.
The renewed spat centers on Trump’s $3.3 trillion tax bill, which would strip key electric vehicle subsidies that have supported Tesla’s sales. Musk initially supported Trump’s re-election bid before turning into a vocal Trump critic who plans to fund opposition campaigns and establish a new political party.
The stock price of Tesla has decreased by more than 20% throughout 2025 because major markets including China and Europe have experienced declining consumer demand. The China Passenger Car Association reported that Tesla sales in China decreased by 15% during May compared to the previous year while the April decline was more than doubled.
The ongoing rivalry between Trump and Musk creates a lasting negative impact on Tesla’s stock market value according to Wedbush analyst Dan Ives. The relationship between Musk and Trump has evolved from friendship to a dramatic television show according to Ives who also warned about potential federal investigations into Musk’s business operations.
The EV tax credits along with SpaceX and other ventures of Tesla depend on U.S. government contracts and regulatory goodwill for their operations. Investors expect negative consequences to occur when political tensions lead to policy challenges.
