Bernard Condon, Associated Press
Investors bought hundreds of millions of dollars of Tesla stock after Donald Trump was elected on a bet that politics mattered more than profits.
On Thursday, in three hours, they learned once again how dangerous the gambling is.
Elon Musk’s electric car maker stock plummeted more than 14% in a spectacular wipeout as investors abandoned their holdings amid the war between the president and the world’s wealthiest. By the end of the trading day, the $150 billion Tesla value had been erased.
The discrepancy began over the president’s budget bill and soon became troubling. After Musk said Trump was not elected without his help, Trump hinted that he could direct the federal government against his companies, including Tesla and SpaceX.
“The easiest way to save money on our budget, billions, billions of dollars is to end Elon’s government subsidies and contracts,” writes Trump of his social messaging service True Social. “I was always surprised that Biden didn’t do that!”
Thursday’s decline has turned on a massive turn in eight weeks since Musk confirmed this month that Tesla will be testing an autonomous, unmanned “Robotakshi” service in Austin, Texas.
Investors fear Trump may not be in a hurry to run through the future of American self-driving cars, and fear that it could smack Tesla. Many of the actual businesses selling electric cars are struggling right now, so we must promise a new era of unmanned cars.
“The overall goal for Robotaxis is to have them in 20 or 25 cities next year,” said Dan Ives, a Wedbush Securities analyst who is one of Tesla’s biggest fans but is now worried. “If we start to raise the regulatory environment, it could delay that path.”
He added: “There’s a fear that Trump will not play Mr. Nice Guy.”
Trump’s threat to cut government contracts appears to target Musk’s other business, SpaceX, rather than his auto company. The privately-held rocket company sent astronauts and cargo to the International Space Station, offering launches at NASA and receiving billions of dollars for doing other jobs. The company is currently competing to develop a mega rocket for the space agency to send astronauts to the moon next year.
Satellite Internet Company Starlink, a subsidiary of SpaceX, also appears to have benefited from Musk’s relationship with the president.
On a trip to the Middle East with Trump last month, Musk announced that Saudi Arabia has approved satellite services for aviation and maritime use. It is not clear how much politics played a role, but a series of other recent deals from companies such as Bangladesh, Pakistan and India have led Trump to threaten tariffs and take the scramble to please the president.
One measure of SpaceX’s success: Private Finance Round is reportedly valued recently at an estimated $210 billion a year ago at $350 billion.
Now it’s all at risk. Tesla’s stocks got even bigger lifts, at least initially, from Musk’s close ties with Trump.
After the November presidential election, investors rushed to the stocks, adding $450 billion to its value in just a few weeks. The belief was that the company would see great wealth as Trump eased Tesla’s regulatory oversight. They were also betting that the new administration would embrace the vision of a bright new future mask for millions of cars on US roads without a fleet of drivers and drivers Les Taxi behind the wheels.
After hitting an all-time high on December 17th, the stock retreated as the era of Musk as head of the government’s cost-cutting group, becoming a huge hit with boycotts and Tesla’s reputation. They’ve been higher recently after the mask vowed to focus more on the upcoming launches of Tesla and Driver Res Taxi.
Investors aren’t that sure right now. That personally led to a massive paper loss in Tesla stock in Musk. That day it fell by $20 billion.
Original issue: June 5th, 2025, 4:48pm EDT
