2teslaM

Musk vs Trump: the political firestorm that’s torching Tesla’s stock

Jacob Falkencrone 400x400
Jacob Falkencrone

Global Head of Investment Strategy

Key points:

  • Elon Musk’s feud with Donald Trump has sparked a sharp plunge in Tesla shares, sending the stock down more than 14% and wiping out over USD 140 billion in market value.
  • Tesla faces potential losses of over USD 1 billion annually if Trump's tax bill becomes law.
  • Investors must closely track political risks and upcoming Tesla milestones like the robotaxi launch.

This content is marketing material.

Imagine riding a rollercoaster in pitch darkness—thrilling when climbing high, terrifying when plunging unexpectedly. Tesla investors find themselves strapped in exactly this way, as the electrifying drama between Elon Musk and Donald Trump sends them hurtling downward in spectacular fashion, with Tesla's shares plunging more than 14%.

From policy clash to personal battle

What began as a mere policy disagreement has exploded into an all-out public feud between the billionaire CEO and the US president, rattling markets and wiping more than USD 140 billion off Tesla’s market value in a single day. Musk has openly labelled Trump’s sweeping tax and spending bill—famously dubbed the "one big beautiful bill"—as a "disgusting abomination" that recklessly balloons the federal deficit. Trump’s swift and furious response branded Musk as "crazy" and publicly threatened to rip up billions of dollars worth of crucial federal contracts and subsidies enjoyed by Tesla and SpaceX.

Musk’s recent exit from his brief political advisory role had initially seemed promising for Tesla’s focus on business rather than politics. However, investors now face a grim reality check as the political battle intensifies. The very subsidies and tax credits Trump threatens to axe have long bolstered Tesla’s profit margins. Specifically, the early termination of electric vehicle (EV) tax credits worth up to USD 7,500 per vehicle could slash roughly USD 1.2 billion annually from Tesla’s earnings—a severe blow to profitability that shareholders simply can’t ignore.

“Without me, Trump would have lost the election,” Musk recently jabbed on social media, adding pointedly: “Such ingratitude.” Musk even took the feud to a more personal level, suggesting Trump's name was linked to the controversial Epstein files—a provocative allegation that underscores the deeply personal nature of this escalating dispute.

The conflict has now moved beyond mere words and financial threats, with Musk dramatically escalating matters by announcing that SpaceX will immediately begin phasing out its Dragon spacecraft, a critical vehicle used by NASA to transport astronauts and supplies to the International Space Station. This bold decision underscores how intensely personal disagreements can rapidly spiral into operational disruptions with significant real-world implications.

This kind of rhetoric, colourful though it may be, only deepens investor anxiety. Musk’s audacious style, a magnet for both admiration and scrutiny, has always been a double-edged sword. But Tesla investors are increasingly forced to question whether their CEO’s public brawls are a liability they can afford.

Tesla’s political headache: why investors should worry

The issue isn’t just theoretical: the political volatility is already hitting Tesla’s bottom line. In Germany, a key market, sales fell by a steep 36% in recent data, as some analysts link consumer hesitancy directly to Musk’s increasingly contentious public persona. Investors must now weigh whether Musk’s continued high-profile political skirmishes could jeopardise Tesla’s broader global growth ambitions.

But the risks stretch beyond Tesla’s auto operations. Musk’s ventures, especially SpaceX, rely heavily on US government contracts worth more than USD 20 billion. Trump’s threats, while complex to implement immediately, create a dangerous cloud of uncertainty. Any abrupt reduction in federal funding would send shockwaves not just through Musk’s companies but also across the broader market of government-dependent tech enterprises.

tesla_chart

Lessons from the Musk-Trump fallout for the broader market

Beyond the immediate implications for Tesla, Musk’s clash with Trump highlights broader dangers for investors in politically-sensitive sectors. This feud vividly demonstrates how swiftly personal politics can escalate into corporate vulnerability, raising red flags for investors backing other high-profile, outspoken CEOs. It’s a stark reminder that when corporate leadership engages too deeply in the political fray, investors often end up paying the price.

Could this dramatic public rupture trigger a broader rethink among investors regarding CEO-driven companies, whose leaders have enormous influence—sometimes too much—in shaping market sentiment? Investors might soon demand a premium for political neutrality as much as for visionary leadership.

Key things to watch next

The immediate spotlight will fall on the Senate vote regarding Trump’s tax bill, slated to happen within weeks. Musk has rallied some senators to reconsider elements of the legislation, and any significant amendments could substantially alter Tesla’s financial landscape. Investors need to track this vote closely, as it directly affects Tesla’s future profitability.

Equally crucial is Tesla’s imminent launch of its robotaxi programme in Austin. A successful debut could refocus the narrative onto Tesla’s innovation and product potential, providing a timely boost to investor sentiment. However, any hiccups now would be magnified under heightened scrutiny, potentially leading to further market turbulence.

Practical steps amid the volatility

In practical terms, amid the volatility, it is wise to:

  • Monitor Senate developments closely: The tax bill’s evolution directly impacts Tesla’s earnings outlook.
  • Assess Tesla’s robotaxi launch: Watch carefully for early operational signs of success or difficulty, given increased investor scrutiny.
  • Prepare for continued volatility: Expect market swings as long as Musk remains publicly embroiled in political disputes.

Ultimately, investors must remain agile, informed, and prepared to reassess their positions as political and operational events unfold.

Buckle up

For Tesla investors, the message is clear: Musk’s political fireworks, once viewed as eccentric entertainment, now threaten to overshadow Tesla’s fundamental strengths and disrupt shareholder value. Until this storm passes, investors might want to fasten their seatbelts and brace for a volatile ride. The Tesla rollercoaster, fuelled by Musk’s relentless energy and Trump’s mercurial policies, shows no sign of slowing down anytime soon.

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.


Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-hk/about-us/awards.

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.