Crash-Tested: Tesla Takes a Hit from Trump and Musk's Meltdown
Elon Musk and Donald Trump's feud sends Tesla into chaos — but markets are betting on a high-stakes reconciliation.
Tesla shares are staging a dramatic comeback, clawing back nearly 7% early Friday after a historic single-day loss that erased more than $150 billion in market value. The stunning whipsaw follows an unprecedented public feud between two of America’s most polarizing figures—Tesla CEO Elon Musk and President Donald Trump. What began as a war of words escalated into market chaos, policy uncertainty, and now, a fragile effort to mend the fallout.
The feud exploded Thursday as Musk took to his platform X, launching a barrage of personal and political attacks on the sitting president. His most explosive claim—that Trump is listed in the infamous Epstein files—sent shockwaves through both Washington and Wall Street. Trump retaliated almost instantly on Truth Social, branding Musk “crazy” and threatening to cancel lucrative federal contracts with Tesla and SpaceX. The reaction from markets was immediate and punishing.
Tesla's 14% plunge marked its worst single-day loss in history, obliterating nearly all the gains it had accumulated since Trump’s reelection. Investors, already jittery about rising competition and upcoming product launches, dumped shares amid fears of escalating political risk. Adding fuel to the fire was Musk’s threat to withdraw SpaceX’s Dragon spacecraft from NASA operations—a statement he later appeared to walk back.
Yet by Friday morning, there were signs the market believed the worst might be over. A statement from the White House offered an olive branch, reaffirming support for Musk’s controversial but influential Department of Government Efficiency (DOGE). Though the agency’s mandate—gutting federal payrolls and dismantling whole agencies—has faced court setbacks, Trump had originally championed DOGE as the cornerstone of his second-term agenda.
Even as conflicting reports swirled over whether the two men planned to speak by phone Friday, the White House’s language suggested a potential thaw. But hopes for a truce were complicated when Trump, speaking to ABC News, declared he was “not particularly interested” in talking to Musk, dismissing him as “the man who has lost his mind.” Meanwhile, rumors circulated that the president was contemplating selling his personal red Tesla.
Dan Ives of Wedbush tried to inject a dose of optimism. In a note to investors, he acknowledged the “massive pressure” the feud had placed on Tesla stock, but held out hope that cooler heads would prevail. He reiterated his bullish outlook, stating that the selloff was overdone and reaffirmed Tesla’s trillion-dollar potential in autonomous technology. “Musk needs Trump, and Trump needs Musk,” Ives wrote. “These two becoming friends again would be a huge relief for Tesla shares.”
Still, not everyone is buying the bounce. CFRA’s Garrett Nelson held firm with a “Hold” rating and a $320 price target. He argued that the political spat was only part of the story. In his view, Tesla’s recent surge following its Q1 earnings was overextended, and the company still faces meaningful headwinds in China and Europe. Add to that a highly anticipated robotaxi event next week—one that might fail to live up to investor hype—and the road ahead looks bumpy.
There’s also the question of Tesla’s Full Self-Driving software. Bloomberg published new video footage this week tied to a fatal 2023 crash involving the feature. The timing couldn’t be worse. With the robotaxi launch in Austin just days away, safety concerns are once again under the spotlight.
So where does that leave Tesla investors?
Some see the dip as a buying opportunity. After all, Tesla remains one of the most innovative companies on the planet. Its battery technology, global manufacturing footprint, and dominance in EV infrastructure put it years ahead of legacy automakers. But Musk’s unpredictable political entanglements—and the fact that he’s willing to go to war with the president of the United States—introduce a level of volatility few other CEOs bring to the table.
Others are taking a more cautious view. The political environment is becoming more combative, not less. The “big, beautiful bill” currently making its way through Congress—a massive spending package championed by Trump—has become a new wedge issue between the former allies. Musk’s opposition to the bill, and his framing of it as a fiscal disaster, directly undercuts the president’s agenda. That’s not likely to be forgotten anytime soon.
And DOGE, the agency Musk once helmed, is now a legal and bureaucratic liability. Many of its mass layoffs and federal funding cancellations have been overturned in court, drawing bipartisan criticism. Though Musk was brought in as a “change agent,” his exit from D.C. was marked by turmoil and lawsuits. Whatever goodwill he once enjoyed in Washington has eroded, and the feud with Trump may only accelerate that decline.
Still, history shows Musk has a knack for surviving—even thriving—in chaos. Whether he’s feuding with regulators, short sellers, or presidents, he often turns adversity into innovation. But this time may be different. His empire now spans not just cars, but rockets, satellites, and AI. Each of these arenas depends on a functional relationship with government. Picking a fight with the most powerful man in the world is a risky bet.
Investors will be watching closely in the days ahead. The robotaxi launch on June 12 will serve as both a technological milestone and a litmus test for market sentiment. If Tesla delivers, much of this week’s drama could fade into the rearview mirror. But if it disappoints—or worse, if the Trump-Musk feud reignites—the road could get even rockier.
Ultimately, the market’s reaction Friday shows that faith in Tesla’s long-term vision remains. But faith has limits. And when $150 billion can vanish overnight, the line between genius and self-destruction gets razor-thin.
Conclusion
Tesla’s rebound comes not just from earnings potential or innovation, but from investor hope that Musk and Trump can end their very public spat. For all its promise in autonomous vehicles, AI, and space, Tesla is still tethered to the volatile human forces that steer it. Investors betting on the future will need to navigate the political potholes just as much as the financial metrics. Until then, buckle up.