Tesla stock (TSLA) took a hit, dropping 5% on Tuesday as the ongoing spat between CEO Elon Musk and President Trump flared up again. Trump threatened to pull government subsidies from Musk’s ventures, including Tesla and SpaceX (SPAX.PVT).
"Elon may get more subsidies than any other person in history, and without them, he’d probably have to pack up and return to South Africa," Trump posted on Truth Social.
"No more rocket launches, satellites, or electric car production, and our country would save a FORTUNE," he continued. "Maybe we should have DOGE take a good, hard look at this? BIG MONEY TO BE SAVED!!!"
These remarks came after Musk criticized Trump’s "big, beautiful" tax and spending bill over the weekend. The bill proposes eliminating EV tax credits—hitting Tesla customers—and adding $1 trillion to its total cost. The Senate passed it Tuesday, with the EV provision alone expected to cost Tesla around $1.2 billion annually.
Meanwhile, SpaceX has secured over $21 billion in federal contracts, and a Washington Post analysis this year estimated Musk's companies have received at least $38 billion in government support over the last twenty years.
On Monday night, Musk shared an AI-generated image of Pinocchio labeled “liar,” aimed at lawmakers backing the bill. Just hours later, Trump fired back, saying Musk always knew he opposed the EV mandate, even though Musk had previously endorsed him.
This renewed feud echoes a clash in June that wiped out over $150 billion from Tesla’s market cap in a single day. It also revives criticism of Musk’s past leadership of DOGE, the Department of Government Efficiency, which aimed to cut federal spending but faced backlash.
Wedbush analyst Dan Ives noted, “Tesla investors want Musk to concentrate on running Tesla and steer clear of this political drama... Ultimately, being on Trump’s bad side won’t end well.”
Also weighing on the stock is Tesla’s sales drop for a sixth straight month in Sweden and Denmark in June, with a 45% year-over-year decline in EU sales adding pressure. The company is expected to report global delivery numbers Wednesday, with Wall Street projecting an 11% annual drop.
Despite a recent bounce on trade optimism and Musk stepping back from DOGE in May, Tesla stock remains down 21% year-to-date.