Tesla share price crash: Elon Musk and Donald Trump’s escalating spat has wiped out a whopping $150 billion from Tesla’s market cap. Tesla’s share price crashed over 14% as shareholders hastily sold their positions during an escalating verbal dispute between the US President Donald Trump and the Tesla CEO Elon Musk, who is currently the wealthiest individual globally. The day’s trading concluded with Tesla’s market value reduced by $150 billion, an amount that exceeds the total market capitalisation of Starbucks and several other major US-listed corporations!Following Donald Trump’s election, investors poured vast sums into Tesla shares, prioritising political considerations over financial performance.The consequences of this strategy became evident on Thursday when within three hours, the situation took a dramatic turn!
What’s gone wrong between Musk & Trump?
The conflict originated from discussions about the president’s budget legislation before intensifying rapidly. Following Musk’s assertion regarding his role in Trump’s electoral victory, Trump suggested potential governmental actions against Musk’s enterprises, including Tesla and SpaceX.Trump expressed his views on Truth Social, stating: “The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. I was always surprised that Biden didn’t do it!”Also Read | ‘Electric cars that nobody else wanted…’: Donald Trump’s shocking words on Elon Musk; says Biden should have terminated Musk’s subsidies
Tesla share price crash: Where’s the stock headed?
Tesla share price crash on Thursday partly offset a significant increase that occurred during the eight-week period after Musk announced Tesla’s plans to launch an autonomous, driverless “robotaxi” service in Austin, Texas, this month.The market participants are concerned that Trump’s potential stance might slow down the advancement of autonomous vehicles in the United States, which could adversely affect Tesla. The company’s current electric vehicle business faces challenges, making it crucial for them to swiftly transition into the era of driverless vehicles.“The whole goal of robotaxis is to have them in 20 or 25 cities next year,” said Wedbush Securities analyst Dan Ives, a prominent Tesla supporter who now expresses concern. “If you start to heighten the regulatory environment, that could delay that path,” Ives said according to an Associated Press report.He further stated, “There is a fear that Trump is not going to play Mr. Nice Guy.”The situation appears precarious now. Initially, Tesla’s stock benefited substantially from Musk’s association with Trump.Following the November presidential election, investor enthusiasm drove Tesla’s market value up by over $450 billion within weeks. Investors anticipated substantial gains from reduced regulatory oversight under Trump’s administration and were optimistic about Musk’s autonomous vehicle initiatives for American roads.The shares peaked on December 17, but subsequently declined when Musk’s leadership of a government efficiency committee sparked boycotts and damaged Tesla’s image. The stock has recently rebounded after Musk announced his renewed focus on Tesla and its forthcoming autonomous taxi service.Currently, investor confidence appears shaken, resulting in substantial paper losses for Musk’s personal Tesla shareholding, dropping $20 billion in a single day.
SpaceX in trouble?
The potential reduction in government contracts appears to majorly affect SpaceX rather than Tesla. SpaceX, a private space enterprise, has secured substantial NASA funding for International Space Station missions, including astronaut transport, cargo delivery, and various space operations. The company is currently developing a large-scale rocket for NASA’s upcoming lunar mission scheduled for next year.Starlink, operating as a SpaceX division specialising in satellite internet services, has seemingly profited from Musk’s previous cordial relationship with Trump.During his Middle Eastern visit with Trump last month, Musk revealed Saudi Arabia’s approval for Starlink’s aviation and maritime operations. Although the influence of political factors remains uncertain, recent agreements in Bangladesh, Pakistan, India and other nations have emerged amid Trump’s tariff warnings and diplomatic pressures.SpaceX’s recent achievements are reflected in its valuation, which reached $350 billion through private financing and share sales, marking a significant increase from $210 billion in the previous year.
