Tesla Plunges 14%: $150 Billion Wiped Out as Musk-Trump Feud Shocks Wall Street

What Sparked Tesla's 14% Crash?

Did you see the news? On June 5, 2025, Tesla shares nosedived 14%, wiping out more than $150 billion in market value in a single day. This wasn’t just another volatile trading session; it was Tesla’s steepest fall since September 2020. The main trigger? An explosive public feud between CEO Elon Musk and President Donald Trump. The two exchanged sharp words over a Republican-backed budget bill that aims to eliminate the $7,500 federal tax credit for electric vehicles—a policy Tesla has relied on for years. Trump went so far as to threaten Musk’s government contracts, sending shockwaves through the market and raising fears about Tesla’s future revenue streams.

A War of Words: Musk vs. Trump

The drama unfolded in the public eye. Musk, who had been a vocal Trump supporter since 2024, suddenly turned against the administration, calling the new budget bill a 'disgusting abomination.' Trump, never one to back down, fired back on his social media platform, Truth Social, suggesting that cutting government subsidies and contracts to Musk’s companies would save billions. Investors watched in disbelief as the spat escalated, with Musk claiming Trump wouldn’t have won the presidency without his backing. The feud not only rattled Tesla’s loyal investor base but also raised questions about the company’s political risk exposure.

How Did the Market React?

Tesla’s stock plummeted as much as 18% intraday before closing down 14.3%—a staggering $47.35 drop per share. The S&P 500 and Nasdaq also dipped, but Tesla’s fall was far more severe than the broader market. Trading volumes surged well above average, signaling panic selling. In after-hours trading, the decline continued. Analysts estimate that over $150 billion in Tesla’s market cap vanished in just hours, partially erasing the gains made during the eight-week rally after Musk announced Tesla’s upcoming robotaxi pilot in Austin.

Why Are Investors So Worried?

Let’s talk about what’s really spooking investors. First, the looming loss of federal EV tax credits could hit Tesla’s profits hard—J.P. Morgan analysts estimate a $1.2 billion annual profit reduction, with another $2 billion at risk from lost regulatory credit sales. Second, Trump’s threat to strip government contracts adds another layer of uncertainty, especially since Musk’s other ventures like SpaceX and Starlink also depend on federal deals. Third, the feud has alienated both Democratic and Republican Tesla buyers, compounding the brand’s political and cultural challenges.

Sales Slump and Insider Selling: More Red Flags

Tesla’s troubles go beyond politics. The company reported a 13% year-over-year drop in Q1 vehicle deliveries, the lowest in over two years. Sales in Europe and China have been disappointing, and consumer interest is waning as competitors roll out their own EVs and self-driving taxis. To make matters worse, two Tesla insiders sold a combined $200 million in shares this week, raising eyebrows about confidence in the company’s outlook. The stock is now trading at a steep premium—185 times forward earnings—compared to its five-year average of 95.5, fueling concerns about overvaluation.

Robotaxi Hopes and the Road Ahead

Despite the chaos, some investors are still betting on Tesla’s future. The highly anticipated robotaxi service, set to launch in Austin this month, could be a game-changer if it succeeds. But there’s stiff competition from Waymo, Cruise, and other tech giants, and regulatory hurdles remain high. Analyst sentiment is mixed: while some see the pullback as a buying opportunity, others warn of more pain ahead, especially if the political headwinds persist. The average analyst price target has dropped to $299.38, nearly 10% below the previous close, and fair value estimates suggest even more downside.

Cultural and Market Context: Why This Matters

Tesla’s wild ride isn’t just about numbers—it’s about culture, politics, and the evolving identity of the electric vehicle market. Musk’s persona, once a symbol of innovation and disruption, is now entangled in partisan battles that alienate both progressives and conservatives. The brand’s cult-like following is being tested by shifting public sentiment, regulatory uncertainty, and the reality that even market darlings aren’t immune to political risk. For global investors, Tesla’s crash is a stark reminder: in today’s world, market success is as much about navigating cultural and political currents as it is about delivering cutting-edge technology.

Daily Price Movement Recap

Here’s a quick recap for those tracking the numbers: Tesla opened at $340, plunged as low as $322 intraday, and closed at $326.35, down 14.3% from the previous day. After-hours trading saw further weakness, with the stock dipping below $325. In just one session, over $150 billion in market cap evaporated, marking one of the most dramatic single-day losses in Tesla’s history.

What’s Next for Tesla and Its Investors?

So, what’s your take? Have you ever seen a blue-chip stock swing this wildly over politics? As the Musk-Trump saga continues, investors are left weighing the risks of more volatility, regulatory changes, and shifting consumer sentiment. Some are holding out hope for a robotaxi-fueled rebound, while others are bracing for more turbulence. One thing’s clear: Tesla’s story is far from over, and the next chapter could be just as dramatic as this one.