Tesla Stock Plummets Amid Musk-Trump Feud Over Tax Bill

On June 5, 2025, Tesla Inc. shares fell sharply, dropping 8.6% to approximately $304, marking the company’s most significant single-day decline in recent months. This downturn is attributed to escalating tensions between CEO Elon Musk and U.S. President Donald Trump concerning the administration’s new tax and spending legislation.

The Root of the Conflict

The dispute centers around the “One Big Beautiful Bill Act,” a comprehensive tax and spending package championed by President Trump. Musk publicly criticized the bill, labeling it a “disgusting abomination” due to its substantial increase in the federal deficit and the elimination of incentives for electric vehicles (EVs) and clean energy, while maintaining subsidies for fossil fuels. He argued that the bill undermines the objectives of the Department of Government Efficiency (DOGE), which he previously led.

President Trump expressed disappointment in Musk’s remarks, highlighting Musk’s prior support for the bill and significant campaign donations. Trump accused Musk of being “hostile” and ungrateful, suggesting that Musk’s criticism stems from the bill’s potential negative impact on Tesla.

Impact on Tesla’s Performance

The public fallout has had tangible effects on Tesla’s market performance. In addition to the stock decline, Tesla reported a 36% year-over-year drop in sales in Germany for May. The company is also facing scrutiny over its autonomous driving technology following a widely publicized fatal crash involving an earlier version of its driver-assistance software. These challenges come as Tesla prepares to launch its AI-driven robo-taxi service in Austin, Texas.

Investor Sentiment and Outlook

Investors are expressing concern over the company’s direction amid the leadership controversy and technological challenges. The recent stock decline has erased previous gains, and some investment firms, such as ARK Invest, have reduced their holdings in Tesla. Analysts suggest that the company’s future performance will depend on its ability to navigate the political landscape and address technological concerns effectively.