Elon Musk, Donald Trump Feud Cost Tesla $150bn in Market Cap

Tesla’s stock suffered its biggest one-day drop ever. By the time markets closed, Tesla had lost about $150 billion in value, a 14 per cent slide. It all started when Elon Musk criticised former President Donald Trump’s new tax-and-spend bill.

In turn, Trump threatened to pull important government contracts from Musk’s companies. Investors who once cheered Tesla’s rapid rise suddenly wondered how exposed the company really was.

Musk’s Take on the Tax-and-Spend Bill

Trump called the new budget package “big” and “beautiful,” even though it eliminated the federal tax credits that make Tesla vehicles cheaper. Musk took to X to label the bill “a disgusting abomination.”

He warned that removing these credits could deter buyers of Tesla models, such as the Model 3 and Model Y. Analysts agreed. They said that without subsidies, Tesla’s growth could slow sharply.

Trump answered on Truth Social. He said taxpayers would “save billions” if Tesla’s Department of Energy and NASA contracts were cancelled. Those deals are central to Musk’s broader empire, such as SpaceX’s NASA partnerships.

After Trump’s post, the conversation shifted. It was no longer just about whether buyers would pay full price for a Tesla. Now it was a matter of whether the government would continue to give Musk’s companies those lucrative contracts.

Market Reaction: $150 Billion Vanishes

As soon as news of the spat spread, Tesla shares fell hard. By the end of trading, investors had erased about $150 billion from Tesla’s market cap. That’s almost unheard of for a carmaker in just one day. Other tech-focused indexes also slid. Traders are worried about the ripple effects of possible policy changes.

Beyond the stock drop, analysts fretted over Tesla’s self-driving ambitions. Musk has bet heavily on launching a robotaxi service. Public tests are already underway in Austin, Texas.

If Trump pushes for tighter rules on autonomous vehicles, federal approval for Tesla’s Full Self-Driving system could be delayed. In that case, Tesla might miss key launch dates, and development costs could rise sharply.

A Sudden Shift in Political Alliances

Just months earlier, in 2024, Musk was a big supporter of Trump’s presidential run. He had donated over $250 million to Trump’s campaign and even took a role at the so-called Department of Government Efficiency (DOGE).

Back then, many investors thought a Trump administration would keep EV subsidies in place. By mid-2025, Musk’s criticism of Trump’s budget caught those buyers off guard. Investors who assumed Trump would protect Tesla felt blindsided.

Tesla’s plunge pulled the Nasdaq 100 down more than 3 per cent. This drop showed how closely tech and electric-vehicle stocks depend on government policy. Hedge funds with large Tesla positions scrambled to hedge their bets. Short sellers jumped in too, betting that Tesla’s troubles were far from over.

Losing $150 billion in just one day shows how much sway a CEO’s social-media post can hold in today’s markets. When a tweet threatens subsidies, contracts, or regulatory approval, investors often sell first and ask questions later. In a 24/7 news cycle, even casual remarks can trigger massive market moves.

What Comes Next?

Where do we go from here? Will Musk and Trump calm down, or is this only the beginning of a bigger battle? Can Tesla reassure investors by emphasising other revenue streams, like energy storage and solar, so it isn’t so dependent on Washington? For now, every post, every tweet, and every quote from these two could shift billions of dollars.