Tesla Loses $152B

Key Takeaways

• Record Stock Crash: Tesla shares fell 14%, wiping out $150–152B in value after Musk clashed with Trump over EV subsidies, dropping its market cap to $916B.
• $3.2B Annual Risk: Regulatory and legislative changes could cost Tesla $3.2B annually due to subsidy cuts, credit losses, and stricter AV rules.
• Investor Volatility: Tesla’s stock surged 169% post-Musk’s Trump support but fell 54% by April; it remains the top automaker at a $916B valuation.

Tesla Shares Crash Amid Feud with Trump

Tesla (TSLA) shares plunged by 14% on Thursday, erasing approximately $150–152 billion in market value in a single day—the steepest drop in the company’s history. This decline pulled Tesla’s market cap down from over $1 trillion to $916 billion. The drop occurred as CEO Elon Musk publicly clashed with President Donald Trump over a new federal spending bill that removed electric vehicle (EV) credits and introduced a $250 annual EV fee. 

Trump, on Truth Social (DJT), accused Musk of “going crazy” after having his EV mandate revoked. Musk responded by calling the bill a “disgusting abomination” and stating that without his support, Trump would have lost the election. As tensions escalated, Musk’s net worth fell by $27 billion, settling at $388 billion, according to Forbes. Tesla’s stock was already down 18% this week and 30% year-to-date, far off its December 18 high of $488.54.

Political Fallout, SpaceX Conflicts, and Regulatory Threats

Musk’s feud with Trump could trigger broader consequences across his business empire. As the former head of the Department of Government Efficiency (DOGE), Musk has now turned sharply critical of the administration. Tesla is facing scrutiny from the U.S. Transportation Department and the National Highway Traffic Safety Administration (NHTSA) over its “Full Self-Driving” system, following a fatal crash. The company’s hopes for mass-producing robotaxis—vehicles without steering wheels or pedals—are at risk. Meanwhile, regulators are exploring rules that may require lidar sensors, which Tesla does not use, relying solely on cameras. 

Proposed legislation could hit Tesla with a $3.2 billion annual impact—$1.2 billion from lost profits and $2 billion from regulatory credits—stemming from efforts to end the $7,500 EV subsidy by 2025 and California-specific mandates. Musk was also reportedly infuriated after Trump allies blocked the nomination of Jared Isaacman to head NASA. Isaacman, who flew private missions via SpaceX in 2021 and 2024, saw his nomination pulled over the weekend.

Tesla’s Volatile Trajectory and Investor Uncertainty

Tesla’s stock performance has mirrored Musk’s shifting political affiliations. After endorsing Trump’s reelection bid in mid-July 2024, Tesla shares surged 169% through mid-December, before collapsing 54% by early April amid backlash and “Tesla Takedown” protests. Despite ongoing troubles, analysts at Wedbush project that Tesla’s AI and autonomous vehicle segment could be worth $1 trillion in future market value. Yet, with EV sales falling in Europe, China, and U.S. markets like California, and with bipartisan skepticism rising, Tesla’s trajectory remains uncertain. 

CEO Ross Gerber noted that the feud “creates a negative force against Tesla,” while other investors like Bob Doll remain skeptical of Tesla’s valuation, which sits at 150 times earnings estimates, far exceeding even tech leaders like Nvidia (NVDA). Despite these concerns, Tesla remains the most valuable carmaker in the world, with a $916 billion valuation compared to Toyota’s (TM) $290 billion.