Tesla Stock Tanks as Trump Threatens to Pull Federal Contracts from Elon Musk’s Companies
Tesla shares took a huge hit on Thursday after a public clash between Elon Musk and former President Donald Trump escalated. Trump hinted that Musk’s companies could lose their federal contracts, and investors didn’t take it well.
The stock fell as much as 18% during the day — Tesla’s biggest drop in five years — then rebounded slightly to close up 14.3%, or $47.35. That single-day drop wiped about $151 billion off Tesla’s market value. The decline continued after the market closed.
The sell-off follows a heated exchange online between Trump and Musk. Musk had criticized Trump’s proposed tax and spending bill, calling it a “disgusting abomination” earlier in the week. The Congressional Budget Office recently estimated the bill would add $2.4 trillion to the deficit over the next 10 years.
On Thursday, Trump fired back on Truth Social, saying one way to cut spending would be to cancel federal contracts with Musk’s companies.
Trump posted, “The easiest way to save money in our budget is… to eliminate Elon’s government subsidies and contracts. I always wondered why Biden didn’t do that!”
One of Musk’s companies, SpaceX, has landed nearly $20 billion in federal contracts since 2008, according to USA Today. That makes Trump’s threat a big deal — and investors noticed.
“This feud is making Tesla investors extremely nervous,” said Dan Ives, a tech analyst at Wedbush. “What started as a friendly relationship has turned into an all-out brawl.”
Musk didn’t hold back either. On X, he posted about creating a new political party that “represents the 80% in the middle” and accused Trump’s tariffs of potentially causing a recession later this year.
Trump, meanwhile, claimed Musk “went CRAZY” over proposed cuts to EV tax credits.
Then Musk took things a step further, announcing that SpaceX would start shutting down its Dragon spacecraft program in response to Trump’s comments.
“SpaceX will begin shutting down its Dragon spacecraft immediately,” Musk posted.
The Dragon has played a huge role in U.S. space missions, making 51 trips — including 46 to the International Space Station. Earlier this year, it safely returned two astronauts after nearly 300 days in orbit, a mission that was extended due to delays with Boeing’s Starliner.
NASA, which has been a major source of funding for SpaceX, said in a statement that it plans to continue working with private companies to carry out the president’s space agenda.
Tesla itself doesn’t rely as heavily on federal money as SpaceX but still benefits from various government programs that help boost its bottom line.
“This sudden fallout between Musk and Trump is a wild twist that’s shaken up the market — and it’s got Tesla investors wondering what could come next,” Ives said in a note.
