Tesla Stock Plunges as Trump–Musk Feud Sparks Investor Panic
Tesla Inc. (TSLA) is currently facing scrutiny, but this time, it’s not because of production challenges or market competition. Instead, the company is grappling with Trump–Musk Feud, between the President Donald Trump and Tesla owner Elon Musk. This political and personal tension has become a significant market liability, causing Tesla stock to plummet and raising serious concerns among Wall Street analysts.
On June 26, 2025, financial analysts at Morgan Pierce Capital issued a warning that Tesla’s stock price would encounter substantial short-term difficulties. The primary reasons for this concern were the erosion of investor confidence and the mounting regulatory challenges, all of which were exacerbated by Trump’s rhetoric.
The Breaking Point – What Sparked the Trump–Musk Clash?
Elon Musk, renowned for his unapologetic remarks, criticized Trump’s proposed $3.3 trillion “Megabill,” particularly its environmental rollbacks and reductions in electric vehicle (EV) subsidies. This criticism has sparked renewed tensions. Musk labeled the bill as a step backward for climate and innovation.
In response, Donald Trump publicly criticized Elon Musk during a rally, calling Tesla a “government-subsidized fantasy that will collapse without taxpayer money.” This sparked a wave of anti-Tesla commentary from conservative media outlets and lawmakers aligned with Trump, intensifying concerns about potential political retaliation if Trump wins re-election.
Analyst Warning – Tesla’s Stock at Breaking Point
According to Daniel Evans, a senior equity strategist at Morgan Pierce Capital, the ongoing feud between Trump and Musk could potentially be the “breaking point” for Tesla stock, which has already experienced a significant 12% decline over the past month.
Investors were already on edge due to the global EV market slowdown and Tesla’s shrinking margins. Now, with Trump turning Musk into a political target, institutional investors are worried about instability and potential policy backlash. This feud could result in a valuation reset, as Evans warned.
Tesla’s Q2 earnings, scheduled for release next month, are now being overshadowed by political risk, a factor that is uncommonly intense in the pricing of tech stocks.
Investors React: Tesla Stock Suffers as Uncertainty Grows
Following the escalation of the feud, Tesla’s market capitalization plummeted by $44 billion in just two trading days. Hedge funds such as Bridgewater Associates and Renaissance Technologies were reportedly reducing their exposure to Tesla, while Tesla’s short interest surged by 9%, as per data from S3 Partners.
Retail investors expressed their frustration on Reddit’s r/WallStreetBets and X (formerly Twitter), where trending hashtags like #DumpTesla and #MuskVsTrump reflected their sentiments. The broader Nasdaq Composite also experienced a dip, as Tesla’s performance negatively impacted tech sentiment.
Political Risk and the EV Industry
This clash emerges at a pivotal moment for the electric vehicle (EV) industry. The United States is currently undergoing a complex energy transition, with Tesla leading the charge. However, the influence of former President Trump over key Republican states and donors poses a significant challenge for Tesla. This could result in policy pushback, regulatory delays, or even market access issues in red states.
Musk’s SpaceX and Starlink ventures, which rely on federal contracts and spectrum regulation, could also be collateral damage. Analysts warn that Musk’s multi-company exposure to federal policy makes political disputes particularly dangerous.
Could This Be the “Nail in the Coffin” for Tesla’s Growth Story?
While the phrase “nail in the coffin” may seem extreme, experts agree that this feud is not mere noise. The broader concern is whether Tesla can sustain its momentum without strong government incentives and bipartisan support.
Key Tesla growth levers, such as U.S. EV tax credits, infrastructure expansion, and favorable battery trade deals, could be at risk if Trump regains power and continues to criticize the company.
A report by Bloomberg New Energy Finance warned that a Trump-led rollback in electric vehicle adoption could lead to a 30% decline in U.S. EV adoption, directly impacting Tesla’s revenue.
Conclusion
Tesla, a key player in the electric vehicle revolution, faces a unique challenge due to the ongoing feud between Trump and Musk. This political risk, unprecedented in Tesla’s history, has analysts predicting a significant impact on Tesla stock. Investors must carefully consider the potential for prolonged volatility, policy backlash, and a shifting market narrative.
Tesla’s innovation engine continues to deliver groundbreaking advancements in AI, autonomous driving, and battery storage. However, its reliance on regulatory support and Musk’s personal image could emerge as its most significant vulnerabilities.
