Tesla shares dropped 7% on Monday amid a renewed public feud between CEO Elon Musk and former U.S. President Donald Trump, alarming investors already wary of the electric carmaker’s political entanglements and slumping sales.
The fallout began after Musk, once a key Trump ally and donor, announced over the weekend that he would launch a third political party in protest against a recently passed Republican spending bill. Musk criticized the bill for threatening jobs and stalling innovation in key industries.
In response, Trump accused Musk of going “off the rails” in a post on Sunday, escalating tensions between the two influential figures.
The political clash has raised fears that Musk’s companies—including Tesla, SpaceX, and social platform X—could face more scrutiny or hurdles, particularly as they rely heavily on federal subsidies and government contracts.
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“With the autonomous future and the AI revolution ahead, Musk/Tesla don’t need to keep poking the bear,” said Dan Ives, an analyst at Wedbush Securities. “Trump could create significant roadblocks for Musk’s ventures if this battle intensifies before the 2026 midterms.”
Tesla shares, once soaring, have dropped nearly 40% since their December 2023 peak of $479.76. As of Monday, the stock closed at $289.75—down $26 since last Thursday.
Adding to investor anxiety, Tesla’s sales slumped 13% in both the first and second quarters of this year, even as competitors like GM and Ford posted EV gains. Analysts attribute part of the downturn to Musk’s vocal alignment with far-right figures and controversial political parties, including Germany’s AfD.
Tesla is also losing ground internationally to Chinese EV makers like BYD and Great Wall, which are offering faster-charging, more affordable electric vehicles.
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The reemergence of political drama now threatens to further erode investor confidence in Musk-led ventures as global competition tightens and the EV market evolves.
Source: Agency