Tesla Shares Decline Amid Escalating Tensions Between Trump and Musk Over Tax Breaks

Shares of Tesla, led by Elon Musk, dropped significantly on Tuesday. This decline comes amid a renewed verbal clash between Musk and former President Donald Trump over tax breaks and spending cuts. Musk hinted at forming a new political party. Tesla's stock has already fallen over 20% this year due to declining vehicle sales and Musk's ties with the Trump administration.

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Tesla's sales are decreasing in Europe and China as well. The ongoing tensions between Trump and Musk, who also leads SpaceX, negatively impact investor confidence in Musk's ventures. "This BFF situation has now turned into a soap opera that remains an overhang on Tesla's stock," noted Wedbush Securities analyst Dan Ives. Investors worry about increased scrutiny from the Trump administration on Musk-related government spending.

Political Tensions Affecting Tesla

The most significant rift between Musk and Trump is over the president's large spending bill. Over the weekend, Musk intensified his criticism of the bill, arguing it would harm job creation and hinder emerging industries. On Saturday, Musk posted on X that the bill would be "political suicide for the Republican Party." He suggested he would work to unseat Congress members supporting the bill.

Musk's post was viewed 26 million times on X. Later, he claimed he would establish a new political party if the bill passed. "If this insane spending bill passes, the America Party will be formed the next day," he wrote. This post garnered 32 million views on X. Trump criticized EV mandates and subsidies in response.

Trump's Criticism of Musk

On Truth Social, Trump stated that Musk knows he's against an EV mandate and that people shouldn't be forced to own electric vehicles. "Elon may get more subsidy than any human being in history," Trump wrote, suggesting that without subsidies, Musk might have to return to South Africa. He proposed cutting spending by targeting sectors where Musk is influential.

"No more Rocket launches, Satellites, or Electric Car Production," Trump posted, hinting at potential savings. He referenced DOGE, a cost-cutting entity previously led by Musk. Later, while at the White House before heading to Florida, Trump continued criticizing Musk over potential EV subsidy losses.

Musk's Response to Trump's Remarks

When asked about deporting Musk, Trump warned that DOGE could impact him negatively. "We might have to put DOGE on Elon," Trump said, describing DOGE as a potential threat to Musk due to his subsidies. In response on X, Musk stated he wouldn't escalate the conflict but criticized Trump's stance.

"What good is Doge saving $160B when this bill increases the debt ceiling by $5T?" Musk wrote, highlighting what he sees as inconsistencies in Trump's approach. Despite these tensions, Tesla continues to face challenges with its stock performance amid these political disputes.

With inputs from PTI