Elon Musk and Donald Trump were once political allies. Musk even served in a Trump-created department aimed at cutting government waste. Just a week ago, Trump publicly praised Musk and thanked him during a White House event. But that cordial tone flipped fast. Over the weekend, Musk began slamming Trump’s major tax bill, calling it “disgusting” and a threat to Tesla’s business model. By Thursday, the tension spilled into open conflict. Musk posted online that Trump would have lost the election without him. Trump fired back, labeling Musk “crazy” and threatening to revoke federal contracts for both Tesla and SpaceX. This sudden rift shocked both political observers and investors.
Tesla Shares Take a Nosedive as Markets React
Markets didn’t take the fallout lightly. Tesla shares plummeted 14% on Thursday, wiping out $152 billion in market value—the biggest single-day hit in the company’s history. The drop pushed Tesla’s market cap below the $1 trillion mark for the first time in months. Investors were spooked not only by the feud but also by the bill’s provisions. The Trump bill, which Musk fiercely opposes, would eliminate key EV tax credits and impose new fees on electric vehicle owners. These changes could cost Tesla over a billion dollars annually. While Microsoft managed to post gains, the broader U.S. indexes fell, dragged down by Tesla’s collapse. Even tech-heavy Nasdaq lost 0.83%, showing just how much weight Tesla carries in today’s markets.
Musk Hits Back Hard — Then Hints at Cooling Down
Musk did not hold back. He accused Trump of personal betrayal and political cowardice. He even hinted that Trump’s name may appear in the unreleased Epstein files. As tensions climbed, Musk threatened to decommission SpaceX’s Dragon spacecraft, which plays a critical role in NASA missions. But after Tesla shares tanked, Musk began to shift tone. He replied “Good advice” to a user urging both men to “take a step back.” He also reversed his decision to shut down Dragon operations and acknowledged calls for peace from billionaire Bill Ackman. Despite this, Musk maintained his criticism of the Trump bill, which he claims was rushed and never shown to him. He also denied that EV tax credits were his sole concern. Instead, Musk said he was fighting against “a mountain of disgusting pork” in the legislation.
Musk Faces Political Blowback Beyond Trump
The feud has left many Republicans in an awkward spot. Musk is a major GOP donor, but Trump still dominates the party. House Speaker Mike Johnson tried to calm things down, calling Musk “a friend” and saying policy disputes shouldn’t get personal. However, some Trump allies escalated the rhetoric. Steve Bannon went as far as calling for Musk’s deportation. Meanwhile, the White House is now working behind the scenes to broker a truce. According to Politico, aides have scheduled a call with Musk to find common ground. Tesla’s short-term rebound on Friday in Frankfurt trading shows that investors are watching closely. But uncertainty remains. The future of Tesla and SpaceX’s federal partnerships may hinge on whether this cooling-off period leads to a real reset.
What’s Next for Tesla, SpaceX, and the Markets?
This public split could have lasting effects. Tesla relies heavily on government incentives, especially for EV sales. If those are pulled or reduced, the company’s future earnings could suffer. SpaceX, too, is tied to U.S. defense and NASA contracts, and losing those could destabilize its long-term plans. Markets are now on edge. A smooth reconciliation might calm investors. But if the feud deepens, further volatility in Tesla stock and broader market confidence could follow. Either way, the Musk-Trump drama is no longer just a spectacle—it’s become a real market risk. In today’s fast-moving political and economic landscape, investors can’t ignore personal rivalries when they ripple into policy and valuation. The Tesla saga proves that even private disputes can have very public, billion-dollar consequences.