Tesla's (TSLA) share price drops following Musk-Trump conflict escalation
In a dramatic turn of events, the public feud between President Donald Trump and CEO Elon Musk in June 2025 did not result in any significant disruptions to federal contracts with Musk's companies, SpaceX and Tesla.
The disagreement was sparked when Musk publicly denounced Trump's tax and spending legislation, calling it a "disgusting abomination." This led to Trump's announcement of a desire to "terminate" government contracts with Musk’s companies. However, a formal review by the Trump administration found that the majority of SpaceX’s contracts were too critical to be cancelled, given their importance for defense and NASA missions.
Despite ongoing federal budget cuts in other areas, SpaceX has recently received new contracts, including a NASA deal worth nearly $40 million and a $200 million Pentagon contract for Musk’s AI startup xAI. Tesla, too, remains supported despite Musk’s criticisms of federal budget policies affecting profitability.
Trump, in a post on Truth Social, stated that he does not plan to cut subsidies or government contracts for Tesla and SpaceX, emphasizing that these companies should "flourish like never before."
The fallout between the two figures also raised concerns about the Dragon spacecraft, a key vehicle used by NASA to ferry astronauts and cargo to the International Space Station. However, SpaceX announced it would not be decommissioning the Dragon spacecraft in response to Trump's suggestion of ending federal contracts with Musk's companies.
The feud between Trump and Musk began on June 5, 2025, and the subsequent contract review did not lead to any large-scale cancellations as of August 2025. Despite this, Tesla shares plunged more than 14% on Thursday, erasing many of the gains made in recent weeks. The downward trend in Tesla shares continued in after-hours trading, wiping out over $150 billion in market capitalization.
Musk, in a series of posts on X, denied Trump's claims and suggested Trump should be impeached. He also claimed, without evidence, that President Trump is named in unreleased Epstein files.
On a brighter note, Musk announced a trial rollout of robotaxis in Austin, Texas, providing a glimpse into the future of transportation.
References:
- Bloomberg
- The Verge
- CNET
- CNBC
- Truth Social Post
- The financial implications of the dispute between President Trump and CEO Elon Musk in June 2025 extended beyond business, involving politics and general news, as Trump's tax and spending legislation was at the heart of the disagreement.
- In the realm of technology, SpaceX's AI startup, xAI, recently secured a $200 million Pentagon contract, showcasing that despite the ongoing feud between Musk and Trump, partnerships in the tech sector continue to materialize.
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