When it comes to US President Donald Trump, Tesla CEO Elon Musk just can’t catch a break.
The high-profile implosion on Thursday of what had until recently been a cozy friendship between the two sent Tesla’s stock price plummeting, shaving $152 billion off its market cap in a matter of hours, the biggest single drop in the company’s history.
Although the fight didn’t change anything about Trump’s attitude toward EVs, per se — he has never been a supporter, and long planned to slash EV tax credits — the plunge revealed that Trump has Musk painted into an even smaller corner than was previously realized. When the two were close, with Musk supporting Trump’s campaign, resulting in his time leading the Department of Government Efficiency and serving as a White House adviser, many EV drivers no longer wanted to buy his cars: Tesla’s first-quarter sales dropped 13%, which many analysts attributed to public disapproval of Musk’s politics, in addition to escalating price competition with Chinese EV makers. Now that they appear to be enemies, Wall Street no longer wants to buy Tesla stock.
Given Tesla’s weak sales over the past few months in both the US and abroad — in Europe, it was suffering from similar disillusion with Musk among potential buyers, as well as cut-throat competition from Chinese manufacturers — it’s likely that before the spat, the company’s shares had been trading at a kind of Trump-friendship premium, and that the correction brings the share price more in line with what it ought to have been already.
Given that both men are renowned for their mercurial temperaments, it’s possible the whole thing could blow over quickly: By Friday, the share price had already regained nearly half the value it lost. But Trump still has plenty of new ways to hurt Tesla’s businesses, particularly by supporting the effort by Republicans in the House of Representatives to cut tax credits for solar and batteries, and by excluding Musk as a moderating voice on steep tariffs on critical minerals imported from China. The Trump-Tesla saga is far from over.