Tesla’s market value took a major hit Thursday as tensions between President Donald Trump and Elon Musk flared in full public view, unnerving shareholders and rattling confidence in the electric car giant’s future.
The company’s stock nosedived 14% in a single day, shedding a staggering $150 billion in market capitalization. Notably, the drop wasn’t triggered by any internal company developments but rather by a heated exchange between Musk and Trump that played out across social media.
Musk, who has previously referred to himself as Trump’s “First Buddy,” lashed out at the president’s proposed tax legislation, prompting a quick and combative reply from Trump, who claimed Musk was merely bitter over losing electric vehicle-related tax incentives.
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Mounting Political Risk and Regulatory Pressure
The fallout from this public feud may spell trouble for Tesla’s long-term ambitions, especially as the company seeks regulatory green lights for its next-generation driverless technology.
The U.S. Transportation Department, which oversees vehicle safety standards, holds considerable authority over whether Tesla will be allowed to move forward with its vision of mass-producing robotaxis that operate without steering wheels or pedals.
Complicating matters further, the department is currently probing Tesla’s Full Self-Driving software after a fatal accident involving the technology. This raises additional scrutiny at a time when Tesla needs strong regulatory support for its bold moves in autonomous transportation.
“Elon’s politics continue to harm the stock. First he aligned himself with Trump, which upset many potential Democratic buyers. Now he has turned on the Trump administration,” noted Dennis Dick, a Tesla investor and chief strategist at Stock Trader Network.
Facing sluggish electric vehicle sales, Musk has reimagined Tesla’s path forward by focusing on self-driving taxis as the cornerstone of its growth. He’s even suggested that those who don’t believe in the company’s autonomous vision should reconsider their investment.
“Investors should sell their Tesla stock” if they doubt the firm will overcome the technical hurdles of driverless technology, Musk declared during a previous earnings call.
Analysts at Wedbush estimate the potential market value tied to Tesla’s artificial intelligence and self-driving innovations could exceed $1 trillion, emphasizing the high stakes.
Musk has also advocated for a unified national approval process for autonomous vehicles to simplify the patchwork of state-level rules that currently complicate deployment plans.
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