Shares of Elon Musk's electric vehicle company plunged on Thursday as investors grew concerned that a public feud with former President Donald Trump could damage Tesla’s prospects.
Tesla stock closed down more than 14 percent after a political dispute over the US budget bill escalated. Musk had claimed that Trump would not have been elected without his support. In response, Trump hinted at using the power of the federal government against Musk’s companies, including Tesla and SpaceX.
“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,” Trump posted on Truth Social. “I was always surprised that Biden didn’t do it!”
USD 150 billion wiped out
Thursday’s drop wiped out nearly USD 150 billion in Tesla’s market value, partially reversing the stock’s gains over the past two months. That rally had followed Musk’s confirmation that Tesla would begin testing a fully autonomous “robotaxi” service in Austin, Texas, this month.
Now investors worry that Trump, if elected again, may not support the rollout of self-driving vehicles. Tesla’s long-term business strategy heavily depends on robotaxis.
Musk-Trump feud
While Trump's threat seemed aimed at SpaceX more directly, Tesla’s close association with Musk and reliance on regulatory goodwill has raised concerns.
SpaceX, Musk’s privately held rocket company, has received billions in government contracts from NASA for cargo and crew missions to the International Space Station and other projects. It is currently working on a new rocket designed to return astronauts to the moon next year.
Starlink, a subsidiary of SpaceX that provides satellite internet, has also benefited from Musk’s political ties. During a recent Middle East trip with Trump, Musk announced Saudi Arabia’s approval of Starlink for use in aviation and maritime sectors. While the political motivations are unclear, similar deals have followed in Bangladesh, Pakistan, India and other countries, as Trump’s trade threats pushed diplomats to ease tensions.
One indicator of SpaceX’s rising influence: a recent private share sale reportedly valued the company at \$350 billion, up from \$210 billion just a year earlier.
Tesla shares had initially surged after Trump’s 2016 election win, hitting a record high on 17 December. However, gains faded when Musk took a position leading a government cost-cutting task force and Tesla’s public image suffered. Recently, the stock had rebounded on optimism around Musk’s renewed focus on Tesla and the rollout of driverless taxis.
(With inputs from AP)
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