Shares of Tesla Inc. plunged nearly 7 percent on Tuesday, wiping out approximately $150 billion in market capitalization, amid reports of a fallout between Tesla Chief Executive Elon Musk and former United States President Donald J. Trump.
The decline in Tesla’s stock, one of the steepest single-day losses for the company this year, followed growing speculation that relations between Musk and Trump — once viewed as strategically aligned — have become strained in the lead-up to the 2024 presidential election.
According to sources close to the matter, Mr. Trump is reportedly displeased with Mr. Musk’s reluctance to openly endorse his candidacy or conservative agenda. The former president is said to have expressed this dissatisfaction during recent private fundraisers, suggesting that Musk’s lack of visible political support may result in Tesla losing future federal backing should Trump return to office.
The news contributed to increased volatility in Tesla’s stock, as investors reassessed the potential risks of a shifting political landscape. Tesla, a leader in the electric vehicle (EV) sector, relies heavily on government policy, regulatory incentives, and infrastructure programs to support its business model. The prospect of a deteriorating political alliance has raised concerns regarding future federal subsidies, tax incentives, and procurement opportunities.
Mr. Musk, who has historically shown alignment with both liberal and conservative viewpoints, has recently taken a more politically neutral stance. While he has previously praised some of Mr. Trump’s policies, he has also criticized both Democratic and Republican leaders. This approach, while consistent with Musk’s broader message of “independent thinking,” has drawn scrutiny in the context of Tesla’s dependency on public-private partnerships.
Financial analysts observed that the sharp fall in Tesla’s valuation reflects investor unease rather than operational deficiencies. “This is a sentiment-driven correction,” said Andrew Palmer, senior analyst at Apex Investments. “Investors are worried about political access and how it may influence Tesla’s position under a possible Trump administration.”
The incident comes at a time when Tesla is facing intensified competition, particularly from Chinese EV manufacturers such as BYD. Additionally, Tesla is contending with softening demand in key markets, recent layoffs, and product delivery delays.
Industry observers note that the broader EV sector also saw modest declines, as fears of shifting political priorities reverberated across related stocks.
Despite Tuesday’s losses, Tesla remains the most valuable automaker in the world and a dominant force in the global electric vehicle market. However, the episode serves as a reminder that in today’s interconnected world, corporate valuation can be deeply influenced by political perceptions and public relationships.
