In early June 2025, a highly publicized fallout between Elon Musk and former President Donald Trump sent shockwaves through financial markets—triggering a historic plunge in Tesla’s stock and slashing tens of billions from Musk’s personal fortune. What began as a political disagreement quickly escalated into an economic crisis for one of the world’s most influential tech CEOs.
🚨 The Feud That Sparked the Collapse
The conflict erupted on June 5, when Elon Musk fiercely criticized Trump’s “One Big Beautiful Bill”—a sweeping Republican-backed budget package. Musk labeled it an “abomination,” condemning its proposal to eliminate the $7,500 federal electric vehicle tax credit, which has long benefited Tesla and its customers.
Trump responded swiftly and sharply, branding Musk as “disrespectful” and threatening to revoke key government subsidies and contracts awarded to Musk’s companies, including Tesla, SpaceX, and Starlink. The public clash marked the formal end of their once-aligned political relationship—and set off alarm bells on Wall Street.
📉 A Sudden Market Crash
The very next day, Tesla’s stock nosedived by approximately 14%, wiping out nearly $150 billion in market capitalization. The selloff was swift and brutal—triggered by investor fears over the company’s dependency on federal incentives and the potential fallout from Trump’s threats.
Elon Musk personally lost an estimated $34 billion in net worth in a single day, marking the second-largest one-day billionaire loss in recorded history.
💸 Why So Much Was Lost
Several key vulnerabilities were suddenly exposed:
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Loss of EV Tax Credits: Analysts estimate that removing Tesla’s $7,500-per-vehicle credit could cost the company roughly $1.2 billion annually, dealing a direct blow to profitability and consumer demand.
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Threats to Federal Contracts: SpaceX alone holds over $22 billion in U.S. government contracts. The risk of political retaliation and subsidy revocation created immediate instability across Musk’s business empire.
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Regulatory and Market Uncertainty: Tesla is already under scrutiny for its autonomous vehicle technologies, carbon credit strategies, and the upcoming robotaxi rollout. The feud added fuel to existing doubts about the company’s regulatory outlook.
🌐 Broad Implications
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Global Capital Shift: In response to the volatility, global investors began reallocating funds toward emerging EV markets, especially in Asia, with India gaining particular interest.
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Reliance on Government Support: Financial analysts noted how deeply intertwined Musk’s business ventures are with government contracts and incentives. Cathie Wood and other prominent investors warned that Musk’s empire may be more fragile than previously believed.
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Delays and Pressure on Future Projects: Political tensions have cast uncertainty over upcoming Tesla innovations and SpaceX missions, with regulatory agencies expected to take a closer look at everything from safety protocols to fiscal accountability.
🔍 Bottom Line
Elon Musk’s open conflict with Donald Trump has proven costly—financially and strategically. With $150 billion wiped off Tesla’s value and $34 billion lost from Musk’s personal net worth in just one day, the feud underscores a harsh reality: even the most powerful business empires are vulnerable when political support vanishes. In today’s climate, political tensions can reshape markets overnight—especially for companies that rely heavily on government contracts, incentives, and favorable regulation.