Trump Threatens Elon Musk Subsidies, Tesla Stock Nosedives 7%

Tesla stock drops 7% after Trump vows to cut Elon Musk’s subsidies, hitting Tesla and SpaceX amid political backlash over EV credits.

Jul 1, 2025 - 10:48
Jul 1, 2025 - 10:48
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Trump Threatens Elon Musk Subsidies, Tesla Stock Nosedives 7%
Trump Threatens Elon Musk Subsidies, Tesla Stock Nosedives 7%

Tesla stock (TSLA) tumbled more than 7% on Tuesday amid escalating tensions between CEO Elon Musk and President Donald Trump. The president renewed threats to slash government funding tied to Musk’s various ventures, including Tesla and private aerospace giant SpaceX.

“Elon may get more subsidy than any human being in history,” Trump posted Monday on Truth Social. “Without subsidies, Elon would probably have to close up shop and head back home to South Africa.” He also suggested pulling the plug on electric vehicle incentives and rocket launches, claiming it would save the country "a fortune."

Trump’s latest comments came shortly after Musk voiced strong opposition to the administration’s newly amended tax and spending bill, which cleared a key Senate hurdle over the weekend. The revised legislation would accelerate the phase-out of electric vehicle tax credits, a move that could impact Tesla's bottom line by an estimated $1.2 billion annually. Meanwhile, SpaceX has reportedly secured over $21 billion in federal contracts to date.

On his platform X, Musk described the bill as "insane and destructive," criticizing it for favoring outdated industries at the expense of innovative sectors like clean energy and space technology. The billionaire even floated the idea of forming a new political party — the second such proposal in recent weeks — if the bill gains final approval.

Tesla shares already slipped nearly 2% on Monday, ahead of the Senate’s vote-a-rama session, which extended into early Tuesday. That downturn intensified following Musk’s late-night post of an AI-generated image labeling politicians who support increased debt spending as “liars.”

Trump swiftly responded, reiterating his opposition to the electric vehicle mandate and hinting at further action. “Elon Musk knew, long before he so strongly endorsed me, that I was against the EV mandate,” he wrote.

The revived clash between Musk and Trump echoes a similar confrontation in June that wiped more than $150 billion from Tesla’s market value in a single trading day. With each public jab, analysts worry the drama is hurting shareholder confidence.

“Investors want Musk to focus on Tesla operations rather than political disputes,” Wedbush analyst Dan Ives noted in a report. “Being on Trump’s bad side rarely ends well, and the longer this battle continues, the more Tesla’s stock will suffer.”

Compounding the pressure, new data on Tuesday revealed Tesla’s vehicle sales in Sweden and Denmark dropped for the sixth straight month in June. Investors are now eyeing Tesla’s global delivery report, expected Wednesday, with projections suggesting an 11% year-over-year decline.

The ongoing political row, coupled with weakening international sales, underscores growing concerns among investors about Tesla’s near-term outlook.

Also Read: Stock Market Live: Tesla Falls, Dow and Nasdaq Slip as Senate Acts on Tax Plan and AI Law

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