Tesla Stock Plunges as Donald Trump’s Criticism Wipes Billions Off Market Value

Tesla Inc. (TSLA) shares fell sharply by up to 6% during Tuesday’s trading session (July 1, 2025), after U.S. President Donald Trump launched harsh criticism against Elon Musk and his companies, including Tesla and SpaceX. Trump accused Musk of profiting excessively from U.S. government subsidies and contracts, which he claimed were unjustified.

Timeline of the Tesla–Trump Tensions

• Monday, June 30, 2025
  Elon Musk publicly criticized the spending and tax bill nicknamed the "Big, Beautiful Bill" by Trump. Musk described the bill as "insane" and warned that it could harm the labor market. This initial criticism caused Tesla's stock to drop by about 1.9%
   
• Tuesday Morning, July 1, 2025
  On his platform, Truth Social, Trump responded sharply:

"Elon has probably received more subsidies than anyone in history. Without subsidies, he might have had to shut down his companies." Trump also called on a fictitious agency, the "Department of Government Efficiency" (DOGE), to review all contracts awarded to Tesla and SpaceX. He further threatened to revoke electric vehicle (EV) incentives and billion-dollar contracts.

• Market Close
  Tesla shares ended the session significantly lower, recording a daily decline of approximately 4.5% to 6%, closing deep in negative territory.

Immediate Impact on the Market

Tesla's market capitalization reportedly lost billions of dollars in a single trading day. This decline exacerbated the company’s poor stock performance, which had already been under pressure from political and business tensions in June.

Wedbush analysts warned that the political conflict between Musk and Trump has now become an “overhang” that clouds Tesla’s stock outlook. Despite the turmoil, they maintained an outperform rating on the stock, with a price target of USD 500.

As of now, Tesla, SpaceX, and Elon Musk have not issued any official statements regarding Trump’s latest threats.

Impact and Implications Analysis

Analyst Views and Long-Term Outlook

Wedbush analyst Dan Ives acknowledged that this political conflict poses short-term pressure on Tesla’s stock performance. However, he remains optimistic about Tesla’s long-term prospects, particularly its leadership in artificial intelligence (AI) and renewable energy sectors.

More broadly, this dynamic is seen as part of the ongoing fiscal policy battles under Trump’s administration, U.S.–China tech tensions, and global geopolitical factors—all of which may continue to influence market movements, including Tesla's stock.

Political Risk Clouds Tesla’s Future

This latest crisis highlights that Tesla faces not only technological and automotive industry challenges but also significant risks as a company caught in the crossfire of U.S. political turmoil.

For investors, this incident serves as a critical reminder that stock performance is influenced not only by business fundamentals but also by regulatory risks and geopolitical uncertainty.

Going forward, investors are advised to monitor developments in the fiscal bill discussions, Trump’s next statements, and Tesla's Q2 financial results. If the threat to revoke EV incentives materializes, pressure on Tesla stock is expected to persist, although the company’s long-term outlook in clean energy and AI remains positive.