Goodbye Mr. Nice Guy? Investors dump Tesla on bet Trump may lash out at
Musk through his car company
[June 06, 2025] By
BERNARD CONDON
Investors bought hundreds of billions of dollars of Tesla stock after
Donald Trump was elected on a bet that politics were more important than
profits.
In three hours Thursday, they learned yet again how dangerous that
gamble could be.
Shares of Elon Musk’s electric vehicle maker plunged more than 14% in a
stunning wipeout as investors dumped holdings amid a bitter war of words
between the president and the world's richest man. By the end of the
trading day, $150 billion of Tesla's value had been erased, more than
what it would take to buy all the shares of Starbucks and hundreds of
other big publicly traded U.S. companies.
In after-hours trading, Tesla shares rose 0.8%.
The disagreement started over the president's budget bill, then quickly
turned nasty. After Musk said that Trump wouldn't haven't gotten elected
without his help, Trump implied that he may turn the federal government
against his companies, including Tesla and SpaceX.
“The easiest way to save money in our Budget, Billions and Billions of
Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,”
Trump wrote on his social messaging service Truth Social. “I was always
surprised that Biden didn’t do it!”
The drop on Thursday partially reversed a big runup in the eight weeks
since Musk confirmed that Tesla would be testing an autonomous,
driverless “robotaxi” service in Austin, Texas, this month.
Investors fear Trump might not be in such a rush to usher in a future of
self-driving cars in the U.S., and that could slam Tesla. So much of its
real business selling electric cars is struggling now and so it needs
the promise of a new age of driverless cars to be realized— and fast.
“The whole goal of robotaxis is to have them in 20 or 25 cities next
year," said Wedbush Securities analyst Dan Ives, one of Tesla's biggest
fans, but now worried. "If you start to heighten the regulatory
environment, that could delay that path.”
He added, "There is a fear that Trump is not going to play Mr. Nice
Guy.”
Trump's threat to cut government contracts seems targeted more to
another of Musk's businesses, SpaceX, than his car company. The
privately held rocket company has received billions of dollars for
sending astronauts and cargo to the International Space Station,
providing launches and doing other work for NASA. The company is
currently racing to develop a mega rocket for the space agency to send
astronauts to moon next year.
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President Donald Trump and Tesla CEO Elon Musk speak to reporters as
they sit in a red Model S Tesla vehicle on the South Lawn of the
White House, March 11, 2025, in Washington. (Pool via AP, File)
A subsidiary of SpaceX, the satellite internet company Starlink, appears
to also have benefited from Musk's once-close relationship with the
president.
On a trip with Trump to the Middle East last month, Musk announced that
Saudi Arabia had approved Starlink for aviation and maritime use. Though
its not clear how much politics has played a role, a string of other
recent deals in Bangladesh, Pakistan, India and elsewhere has come as
Trump has threatened tariffs and sent diplomats scrambling to please the
president.
One measure of SpaceX's success: A private financing round followed by a
private sale of shares in recent months reportedly valued it at an $350
billion, up from an estimated $210 billion a year ago.
Now all that is possibly in danger. Tesla shares got even a bigger lift
from Musk's close relationship with Trump, initially at least.
After the presidential election in November, investors rushed into the
stock, adding more than $450 billion to its value in a few weeks. The
belief was that the company would see big riches as Trump eased
regulatory oversight of Tesla. They also were betting that the new
administration would embrace Musk's plans for millions of cars on U.S.
roads without drivers behind the wheel.
After hitting an all-time high on Dec. 17, the shares retreated as
Musk’s time as head of a government cost-cutting group led to boycotts
and a hit to Tesla's reputation. They've recently popped higher again
after Musk vowed to focus more on Tesla and its upcoming driverless taxi
launch.
Now investors aren't so sure, a worry that has translated into big paper
losses in Tesla stock held by Musk personally — down $20 billion for the
day.
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