Tesla’s stock dropped on Tuesday as Elon Musk finds himself in a conflict with President Trump regarding a proposed GOP spending package.
Republicans are suggesting various reversals in the bill, notably targeting electric vehicle (EV) credits, which could significantly impact Tesla’s profits.
Shares of the company declined nearly 6% during early trading, as reported by the Associated Press.
Dan Ives from Wedbush Securities mentioned that investors are worried about the Trump administration adopting a “more hawkish” stance toward Tesla, especially with federal contracts under scrutiny.
“We anticipate stock prices will soften this morning due to concerns that what was once a close relationship between Trump and Musk may have soured, turning into a typical middle school dynamic of friends and enemies,” he noted.
This latest downturn follows a rocky recent history for electric vehicle manufacturers, as Musk’s actions have intertwined with Washington politics and his relationship with Trump has changed.
The former White House advisor has urged lawmakers to reject the spending bill as it stands and warned of consequences for those who don’t adapt.
“What’s the purpose of continually raising your debt limit?” Musk expressed in a post on the social media platform X on Monday.
“Establishing debt limits is essential to compel the government to curb waste and fraud. That’s the reason for the debt cap law!” he elaborated in a previous message.
Musk previously led an initiative aimed at enhancing government efficiency and pledged to reduce spending while identifying waste, fraud, and abuse.
He contends that substantial Trump-supported legislative efforts would impair his initiatives while advocating for significant cuts to federal programs and contracts.
However, Trump shifted his stance on Tuesday, indicating that in addition to losing EV incentives, Musk should brace for potential backlash from previously supportive entities.
“We might need to put Doge on Elon. Are you aware of what you’re doing? Doge is a force that may need to turn back and confront Elon. Isn’t that something?”
