Elon Musk, despite being the world’s richest person, experienced a sharp lesson this week on the risks of mixing high-stakes business with volatile politics. After publicly clashing with President Donald Trump, Tesla’s stock plunged dramatically, wiping out a staggering $150 billion in market value in a single day.
Musk had initially aligned himself closely with Trump, even taking an active role in the administration’s so-called Department of Government Efficiency (DOGE). This political proximity seemed beneficial at first, with Tesla shares rising and Musk gaining influence in Washington. But when Musk publicly criticized Trump’s proposed budget bill—mocking it as a “big beautiful bill”—the president fired back, threatening to cut Musk’s government subsidies and contracts.
That public spat, played out through social media and press statements, triggered a wave of investor concern. Tesla shares fell 14% on Thursday, a steep decline unrelated to earnings or production but tied directly to the political fallout. Investors feared Musk’s feud with Trump could jeopardize Tesla’s regulatory standing at a critical moment when the company’s future depends on federal approval of its autonomous vehicle technology.
Experts point out that antagonizing Trump risks regulatory retaliation, which could slow or block Tesla’s ambitions. The US Transportation Department is already scrutinizing Tesla’s driver-assistance systems after fatal accidents. Adding political tension now raises the specter of increased oversight or punitive actions, unsettling shareholders.
Tesla’s troubles come amid a global slowdown in electric vehicle sales. The possible elimination of the $7,500 federal EV tax credit under Trump’s budget proposal threatens Tesla’s bottom line by over $1 billion annually. Moreover, legislation targeting California’s strict EV mandates could cost Tesla another $2 billion.
While Tesla remains the world’s most valuable automaker, valued above $1 trillion before the drop, many analysts question whether its lofty valuation—trading at 150 times projected profits—is sustainable without flawless execution. Political distractions and investor nerves around Musk’s Twitter-fueled antics now cast a long shadow over Tesla’s future.
Ultimately, Musk’s public political battles have sent a clear signal: mixing politics with Tesla’s fate is a high-risk gamble that can swiftly erode confidence and market value. For a company betting on a transformative autonomous driving future, smooth relations with regulators and steady investor trust are critical—and that means keeping politics out of the driver’s seat.
