Tesla Stock Drops Amid Musk-Trump Tax Bill Feud

Tesla's Stock Performance Amid Feud

Tesla's stock experienced a significant downturn as tensions escalated between CEO Elon Musk and former President Donald Trump. On Thursday, Tesla shares dropped by 15%, marking one of its sharpest intraday declines in recent months. The market reacted negatively to Trump’s public statements suggesting the potential termination of government subsidies and contracts for Musk's companies, including Tesla and SpaceX. The fallout wiped out approximately $156 billion in Tesla’s market value, raising concerns about the financial stability of the company amidst political uncertainty. Analysts have pointed out that such government contracts and subsidies have been critical for Tesla’s operations and long-term growth strategy.

Key Issues in the Tax Bill Dispute

At the heart of the dispute lies Musk’s vocal opposition to a sweeping tax bill backed by Trump and Republican lawmakers. The proposed bill aims to cut federal spending, partially by eliminating tax credits for electric vehicles (EVs). This provision could accelerate the phase-out of the $7,500 EV tax credit, which has been a significant driver of Tesla’s sales. According to analysts at JPMorgan, the removal of these credits could lead to a $1.2 billion hit to Tesla’s annual profits. Additionally, other provisions in the bill targeting clean energy initiatives could pose further financial risks, potentially affecting Tesla's solar and energy storage divisions. The Congressional Budget Office estimates that the bill could add $2.4 trillion to the federal deficit over the next decade, further fueling political debates.

Investor Concerns Over Tesla’s Future

Investors are increasingly concerned about the broader implications of Musk’s political entanglements for Tesla’s business prospects. Regulatory hurdles for autonomous vehicles have become a focal point, with fears that Tesla’s ambitious robotaxi plans could face delays or stricter oversight. Musk has recently announced plans to roll out driverless taxis in up to 25 cities, but analysts warn that heightened regulatory scrutiny could derail these initiatives. Moreover, Musk’s active involvement in political disputes, including his role in the Trump administration’s cost-cutting group, has raised questions about Tesla’s reputation and its ability to maintain investor confidence. These concerns, coupled with uncertainty over the tax bill’s impact, have cast a shadow over Tesla’s otherwise promising growth trajectory.