Tesla shares dropped nearly 6% after President Donald Trump threatened to investigate Elon Musk’s subsidies via DOGE, reigniting their feud. The EV giant faces challenges from subsidy cuts, declining sales, and rising competition, shaking investor confidence. Musk’s criticism of Trump’s spending bill and threats to fund political rivals further escalate tensions, impacting Tesla’s market outlook.
Tesla Shares Tumble Amid Trump-Musk Feud and Subsidy Threats
Tesla’s stock (TSLA) crashed by as much as 5.8% in trading on July 1, 2025, following President Donald Trump’s renewed threats to scrutinize government subsidies for Elon Musk’s companies, including Tesla and SpaceX. Trump’s Truth Social post suggested that the Department of Government Efficiency (DOGE), previously led by Musk, should investigate subsidies, claiming “BIG MONEY TO BE SAVED.” The remarks came after Musk criticized Trump’s “One Big Beautiful Bill,” a tax and spending package that includes provisions to eliminate the $7,500 electric vehicle (EV) tax credit, a key support for Tesla’s customer base.
The feud, which intensified after Musk stepped down from leading DOGE in May 2025, has rattled investors. Musk, who has been vocal about reducing government spending, called the bill a “debt increase” and threatened to fund primary challengers against Republicans supporting it. Trump retaliated, accusing Musk of benefiting excessively from subsidies and even floating the idea of deporting the South African-born billionaire. “Elon may get more subsidy than any human being in history,” Trump wrote, suggesting Musk’s businesses might “close up shop” without government support.
Market analysts estimate that the elimination of EV tax credits could cost Tesla $1.2 billion annually, with an additional $2 billion potentially lost through regulatory credit sales. Tesla’s stock, already down 21% year-to-date due to declining EV sales and Trump’s tariffs, faced further pressure from rising competition. Xiaomi’s YU7 SUV, launched recently with strong pre-orders, and other domestic automakers offering feature-rich EVs at lower prices are challenging Tesla’s market share, particularly in China and Europe.
The company’s plans for a cheaper Model Y, expected by June 2025, have been delayed by “at least a few months,” adding to investor concerns. Musk’s focus on political activities, including his brief stint at DOGE and threats to form a new political party, has also raised fears that his attention is drifting from Tesla’s core business. Posts on X reflect mixed sentiment, with some users criticizing subsidies for Tesla’s “rich buyers” while others see the feud as a political distraction.
Trump’s comments about DOGE investigating Musk’s subsidies have heightened uncertainty. The department, which Musk helped establish to cut government spending, could target contracts and regulatory approvals critical to Tesla’s robotaxi and cybercab initiatives. Wedbush analysts noted that the Trump administration’s control over spending and approvals poses a significant overhang on Tesla’s stock. Meanwhile, Musk’s net worth dropped by $12 billion in a single day, the largest daily loss among billionaires tracked by Forbes.
Competition and market dynamics continue to weigh on Tesla. Lagging sales in Europe and increasing pressure from Chinese EV makers have compounded challenges. Analysts at AutoForecast Solutions highlighted Tesla’s struggles against newer, cost-competitive models. Despite a 40% stock rally since April on optimism around robotaxi launches, the latest political spat and subsidy threats have erased much of those gains, leaving Tesla’s future uncertain.
Disclaimer: This news report is based on information from credible sources, including Yahoo Finance, Business Insider, CNBC, and posts on X, as of July 2, 2025. All India Press does not provide financial advice, and readers should conduct their own research before making investment decisions.