Tesla Stock Plunges Amid Trump-Musk Feud: What Investors Need to Know

In a dramatic turn of events that has rocked the financial markets, Tesla stock has experienced a sharp decline following an escalating public dispute between former President Donald Trump and Tesla CEO Elon Musk. As of early June 2025, searches for “Tesla stock” have surged by over 300% on Google Trends, placing it firmly at the top of trending topics in the United States.

This article will break down the latest developments, the background of the feud, and what it all means for investors, Tesla shareholders, and the electric vehicle (EV) industry at large.

The Catalyst: Trump's Threats and Musk's Reactions

The controversy began when former President Trump, during a recent press conference, criticized Musk’s influence in American industry and politics. Trump went as far as threatening to reconsider government contracts and subsidies granted to companies led by Musk if he returns to the White House.

In a swift response, Musk took to social media platform X (formerly Twitter), accusing Trump of "petty politics" and asserting that Tesla's success is independent of any political affiliation. Musk's response was fiery and unapologetic, calling the threats “a desperate political stunt.”

This high-profile spat triggered significant investor anxiety. According to Yahoo Finance, Tesla's stock dropped nearly 6% in after-hours trading, reflecting the market’s growing concern over potential political instability impacting the company.

Why the Tesla Stock Drop Matters

For investors, Tesla is not just a car company—it's a symbol of the broader green energy movement, autonomous driving technology, and future-forward innovation. A sudden dip in Tesla’s stock often ripples across other sectors, including EV manufacturers, lithium battery companies, and renewable energy stocks.

The current selloff appears to be driven more by political uncertainty than financials. Tesla's Q1 2025 earnings beat expectations, and its production of the new Cybertruck model is finally ramping up after years of delays. Still, the market is reacting strongly to Musk’s feud with Trump, showing just how sensitive Tesla’s stock can be to public perception and political drama.

The Bigger Picture: Tesla and Federal Support

Tesla has long benefited from various government incentives, such as tax credits for EV buyers and federal subsidies for clean energy initiatives. A hostile political environment could put these incentives at risk, especially if a future administration aims to restructure or remove green energy funding.

According to The New York Times, Trump’s comments suggested that his administration might “reevaluate all Department of Energy funding involving Musk-led ventures,” potentially affecting SpaceX and Neuralink as well.

Investors should watch carefully. While Tesla has grown increasingly self-sufficient, these government partnerships still provide crucial support in areas such as EV infrastructure development, research grants, and vehicle-to-grid technology

Musk’s Influence: Double-Edged Sword

Elon Musk’s bold personality has always been both an asset and a liability. His unfiltered social media presence has garnered massive attention and free publicity for Tesla—but it has also led to SEC investigations, investor lawsuits, and wild market fluctuations.

This latest feud underscores Musk's ability to shape Tesla’s stock performance through personal actions and statements, for better or worse.

For some long-term investors, Musk's unpredictability is becoming a liability. According to investment analyst Sarah Lin of Green Capital Advisors, “The stock doesn’t just reflect Tesla’s fundamentals—it also reflects Elon Musk’s media footprint. That’s not a sustainable model in the long term.”

Market Reactions and Analyst Forecasts

Despite the drop, not all analysts are pessimistic. Goldman Sachs and Morgan Stanley have reiterated their "Buy" ratings on Tesla, noting that the stock is likely to recover once the media dust settles.

“Tesla remains the leader in EV innovation, with unmatched scale and global reach,” said Morgan Stanley analyst Adam Jonas. “While political tensions are a short-term headwind, the long-term trajectory remains solid.”

On the other hand, retail investors—many of whom follow Musk closely on platforms like Reddit and X—seem split. Some view the dip as a buying opportunity, while others are reconsidering their exposure to such a volatile stock.

What Should Investors Do Now?

If you're holding Tesla stock, here are a few strategic tips:

1. Don’t Panic Sell – Reacting emotionally to headlines is a common mistake. Wait for market stabilization and more concrete policy indications.
2. Diversify – Relying too heavily on a single company, even one as iconic as Tesla, can be risky. Consider EV ETFs or green energy funds for broader exposure.
3. Stay Informed– Follow updates on Tesla’s federal contracts and emerging political narratives, especially as we move into the 2026 election cycle.

Final Thoughts: Tesla’s Future Amid Political Crossfire

Tesla has always thrived in uncertainty, whether it was production bottlenecks, public scrutiny, or leadership drama. But as the company grows and becomes more deeply entrenched in the global energy transition, it cannot afford to be constantly distracted by political feuds.

Musk may view himself as a disruptor, but with Tesla’s place as a leader in a trillion-dollar market, investors need stability more than showmanship.

With Tesla stock trending at the top of Google and dominating news cycles, it’s clear that what happens next will shape not just Tesla's valuation—but the future of the entire EV industry.