The back and forth between United States President Donald Trump and Tesla boss Elon Musk sent the price of the stock tumbling last week. However, observers have mentioned that the feud is unlikely to have a lasting effect on the automaker’s long-term goals. The feud began when Musk criticized the Republican spending bill for cutting electric vehicle tax credits, a move he warned would add more than $2.4 trillion to the U.S. deficit.
Trump responded by threatening to cancel government contracts with Musk’s companies. Musk then fired back, saying he would shut down SpaceX’s Dragon spacecraft before backing away from that threat. On Thursday of last week, the TSLA stock slid 14%, erasing about $138 billion from its market value. The shares recovered some ground the next day, but Musk still saw one of the biggest single-day drops in personal wealth ever recorded, an estimated $34 billion hit to his net worth as reported by Business Insider.
Tesla faces a bigger risk than the impact of Trump’s feud
Despite the headlines, analysts noted that there is little reason to believe the feud will leave lasting scars on Tesla’s core business. “Musk’s and Trump’s relationship has an impact on the stock and maybe investor sentiment, but as far as the actual business impact for Tesla, I never thought Trump getting elected was positive or that negative for Tesla,” Morningstar analyst Seth Goldstein told Business Insider. “So with the feud that started between Trump and Musk, I never really viewed that as that positive or negative for Tesla either.”
Goldstein added that the most significant concern for Musk and other electronic vehicle makers is the political push to trim or remove subsidies. President Trump has already signaled he would cut electric-vehicle tax credits, a change Gene Munster of Deepwater Asset Management warned could shrink Tesla’s deliveries by about 15% in 2025.
As Tesla prepares for the launch of its robotaxi services in Austin this month, analysts believe the federal government will let it go ahead as planned. Munster argues that self-driving cars are a key part of “physical AI,” and that the U.S. has an interest in leading both digital and real-world artificial intelligence. He expects “cooler heads to prevail” and for Washington to keep supporting the technology.
Goldstein says the government has almost no way to block Tesla’s self-driving plans. While the Department of Transportation is reviewing federal safety rules for self-driving vehicles, he said it’s unlikely regulators would mandate expensive lidar sensors just to target Musk’s company. “If Trump wanted to hurt Elon, they could more easily cut SpaceX contracts than create a convoluted policy against Tesla,” he added.
In a note released last Friday, Morgan Stanley analyst Adam Jonas echoed the broader sentiment. He said the Musk-Trump dust-up doesn’t change the “longer-term vectors that drive the stock’s value,” pointing to the EV maker’s work in AI, robotics, manufacturing, supply-chain redesign, renewable energy, and critical infrastructure.
By late Friday, the public exchange of former best friends had died down. In a Saturday interview with NBC News, Trump said he doesn’t plan to reconcile with Musk and warned him against backing Democratic candidates. Yet, on Friday, while talking to reporters on Air Force One, the president said on a lighter note, “I hope he does well with Tesla,” Trump said.
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