CNBC reported that Tesla's stock plummeted 14% on Thursday after President Donald Trump threatened to terminate government contracts for companies led by Chief Executive Officer Elon Musk. The sharp decline erased $152 billion from Tesla's market capitalization, dropping it below the $1 trillion threshold to $916 billion, marking the company's largest single-day loss ever.
The dispute intensified over a spending bill, with Trump accusing Musk of overreacting to the removal of electric vehicle mandates. "Elon was 'wearing thin,' I asked him to leave, I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!" Trump posted on Truth Social.
From the Oval Office, Trump elaborated on the strained relationship. "Elon and I had a great relationship. I don't know if we will anymore," Trump said on Thursday. "I was surprised." CNBC noted that Trump highlighted Musk's frustration over the exclusion of electric vehicle credits from the bill.
Musk responded sharply during Trump's remarks. "Whatever," Musk fired back as the president spoke. He escalated the feud on X, asserting, "Without me, Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate." He also claimed that the sealed files on the sex scandal involving Jeffrey Epstein have not been fully released because the president's supposed ties to him.
"Time to drop the really big bomb. [Trump] is in the Epstein files. That is the real reason they have not been made public. Have a nice day, DJT!" Musk tweeted. "Mark this post for the future. The truth will come out." Musk also shared a tweet calling for Trump's impeachment and having his vice president, JD Vance step in.
CNBC reported that Musk, the world's wealthiest individual, recently criticized the spending bill as a "disgusting abomination" and threatened to fund primary challenges against lawmakers supporting it. This marked a shift from his earlier alignment with the Trump administration.
Despite a 22% stock rally in May, Tesla's shares have declined nearly 18% this week, driven by Musk's vocal opposition to the budget legislation. CNBC indicated that the stock is down approximately 30% this year, far from its peak of $488.54 on December 18.
Musk's role as head of the Department of Government Efficiency concluded on Friday, after which his criticisms of Trump's tax-cut bill intensified. He posted numerous attacks on X on Wednesday, targeting provisions that would eliminate electric vehicle and residential solar tax credits, key profit drivers for Tesla.
The bill also introduces a $250 annual fee for electric vehicle owners, further impacting Tesla's market. CNBC highlighted Musk's efforts to lobby Trump and other Republican officials to amend these provisions.
Tesla faces broader challenges, including declining electric vehicle sales in major European markets and a weakening brand reputation in Western countries. The company is also racing to launch a driverless ride-hailing service in Austin, Texas, this month, competing with Waymo's established robotaxi operations in partnership with Uber.
Author Walter Isaacson, who wrote a biography on Musk, commented on CNBC's "Squawk Box" on Thursday. "One of the things about Elon is when he goes all in, he goes all in," Walter Isaacson said. He noted Musk's intense frustration with the situation.
Isaacson also pointed to Musk's irritation with Trump administration officials who opposed the nomination of Jared Isaacman for NASA leadership. "That, to Musk, was just infuriating because they were doing, they were going after Jared Isaacman ... to get at Musk," Walter Isaacson said on Thursday.
CNBC reported that Jared Isaacman's nomination was withdrawn over the weekend. Isaacman, who led two private SpaceX missions in 2021 and 2024, had his company Shift4 invest $27.5 million in SpaceX by June 30, 2021, according to financial filings.
The fallout reflects growing tensions between Musk and the Trump administration, with Tesla's financial performance bearing the brunt of the conflict. The company's stock chart shows a steep decline, underscoring the market's reaction to the ongoing dispute.
