The clash has alarmed investors, who had earlier bet heavily on Musk’s companies gaining from close ties with the Trump administration. That bet is now under threat.
Fallout began over Budget bill
The dispute started when Musk slammed the latest government budget bill, calling it a “disgusting abomination.” In response, Trump took to his platform Truth Social, writing, “The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. I was always surprised that Biden didn’t do it!”
This threat cut deep. Tesla’s value plunged, dipping below the $1 trillion mark and ending Thursday at $916 billion. The sell-off reversed gains made in recent weeks, during which Tesla stock had risen more than 22% following Musk’s announcement of an upcoming robotaxi launch in Austin, Texas.
Investors now spooked about Robotaxi plans
Tesla’s driverless car ambitions were seen as a much-needed boost for the EV giant, especially with its traditional car sales showing signs of struggle. But now, analysts worry that a hostile White House could slow down regulatory approvals.
“The whole goal of robotaxis is to have them in 20 or 25 cities next year,” said Dan Ives of Wedbush Securities. “If you start to heighten the regulatory environment, that could delay that path.” He added, “There is a fear that Trump is not going to play Mr. Nice Guy.”
SpaceX also in the crosshairs
While Tesla took the immediate hit, Trump’s threats also appear to target SpaceX. Musk’s rocket company has received billions in federal contracts, including crucial NASA missions to send astronauts to the Moon next year. The subsidiary Starlink, which provides satellite internet, recently secured operating rights in Saudi Arabia during a trip with Trump.That deal followed similar moves in Bangladesh, Pakistan, and India, as diplomatic efforts aligned with commercial interests. Now, that trajectory may be jeopardised.
From friends to foes
Trump voiced frustration from the Oval Office, saying, “Elon and I had a great relationship. I don’t know if we will anymore. I was surprised.” He claimed Musk was overreacting to the removal of electric vehicle credits in the new budget, saying, “Elon was ‘wearing thin,’ I asked him to leave, I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!”
Musk, known for not backing down, responded on X (formerly Twitter), “Whatever.” He also wrote, “Without me, Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate.”
The row escalated as Musk appeared to call for Trump’s impeachment. He threatened to decommission Dragon, SpaceX’s spacecraft used by NASA, only to pull back hours later, writing, “Good advice. Ok, we won’t decommission Dragon.”
But Musk then made an explosive claim, suggesting Trump may appear in unreleased Jeffrey Epstein files. No evidence was provided.
Karoline Leavitt, Trump’s press secretary, responded mildly: “This is an unfortunate episode from Elon, who is unhappy with the One Big Beautiful Bill because it does not include the policies he wanted.”
Since their very public fallout, Tesla’s stock has fallen nearly 18% this week alone. For the year, it’s down close to 30%. Shares had peaked on 18 December at $488.54.
Thursday’s crash also dealt a blow to Musk personally. His paper losses stood at $20 billion for the day. Investors are now questioning the future of Musk’s business empire, with both Tesla’s robotaxi launch and SpaceX’s moon mission now in uncertain territory.
What happens when the most powerful politician in the US and the world’s richest man go head-to-head? Wall Street just got its answer.
(With inputs from AP)
