Tesla (TSLA) Plunges as Musk-Trump Feud Erupts

Tesla shares (TSLA) plunged more than 14% on Thursday after a dramatic and very public fallout between President Donald Trump and CEO Elon Musk. The clash, sparked by Musk’s criticism of Trump’s signature tax and spending bill, has escalated into personal attacks and policy threats, with Trump vowing to cancel federal contracts with Musk’s companies.

The market reaction was swift. Tesla stock closed down more than 14% on Thursday, wiping out over $150 billion in market capitalization and pushing the company below the $1 trillion valuation threshold.

Feud Erupts Over Spending Bill

The rift began after Musk publicly denounced Trump’s signature tax and spending legislation—dubbed the “One Big Beautiful Bill”—calling it a “disgusting abomination” due to its projected $3 trillion increase in the federal deficit. Trump fired back, claiming Musk only turned against the bill after it proposed rolling back electric vehicle (EV) tax credits, which disproportionately benefit Tesla.

In a series of posts on X, Musk denied Trump’s claims, stating he was never shown the bill and had no influence over its content. He went further, suggesting Trump should be impeached and claiming—without evidence—that the president is named in unreleased Epstein files.

Threats Against SpaceX

The feud didn’t end there, with Trump later suggesting the U.S. could save “billions and billions” by ending all federal contracts with Musk’s companies. In response, Musk declared SpaceX would begin decommissioning its Dragon spacecraft, a key vehicle used by NASA to ferry astronauts and cargo to the International Space Station.

While NASA has not confirmed the threat’s impact, the Dragon program is central to U.S. space operations, and any disruption could delay critical missions. Additionally, Starlink provides crucial connectivity for the U.S. military and various international partners, raising concerns about national security should contracts be pulled.

Market Reaction

It didn’t take long for markets to react to the very public feud. Tesla shares had been climbing in recent weeks after Musk recommitted to leading the EV company full-time and announced a trial rollout of robotaxis in Austin, Texas. But Thursday’s drop erased many of those gains, with the stock closing at $278.40—down from $362 just on Tuesday. The downward trend continued in after-hours trading.

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