Between June 4 to June 5, 2025, Tesla saw a spectacular stock fall as stocks declined by about 14% over 24 hours. The day’s loss wiped out almost $150 billion worth of market capitalization and was the worst one-day decline for the company in over four years. Strangely enough, there was no actual change in Tesla’s finances or below-street-level operations. Instead, it was motivated by escalating political uncertainty and anxious investor unease, namely a very public back-and-forth of insults between Elon Musk and Donald Trump and overall worry about how Tesla would handle shifting federal regulations. The cause of the sell-off is a public and rising feud between Musk and Trump that began when Musk dumped a verbal broadside following Musk’s criticism of a new GOP tax and budget proposal.
Musk called the bill a “disgusting abomination,” a fossil fuel extravaganza, and bad news for clean energy projects. Trump retaliated with public disapproval and threatened to withdraw federal contracts and subsidies from Tesla and other Musk enterprises like SpaceX and Starlink. The standoff, the Wall Street Journal and CNBC reported, made Wall Street nervous as investors perceived the standoff as a political survival threat to Tesla’s company. Threats of losing federal subsidies or contracts, which were these lifeblood sources of revenue and growth expansion, sparked the stock into a free-fall. The stock was a retail and momentum trader darling, and it is strongly sentiment-driven. In a note as quoted by CNBC, former JPMorgan strategist Marko Kolanovic cautioned that the Trump-Musk clash would bleed over into the rest of the market, even leading to a 5–10% correction in the rest of the market.
The sharp sell-off is a refreshing reminder of how sensitive growth stocks like Tesla are to on-again, off-again public politicking and exogenous policy change.