Tesla Shares Plunge 14%, Loses $152 Bln Amid Elon Musk - Donald Trump Fallout

(RTTNews) - Shares of Tesla Inc. plunged around 14 percent on Thursday's trading on the Nasdaq, losing around $152 billion from its market capital in a single day, after CEO Elon Musk's feud with US President Donald Trump turned into a full-blown public war of words.

Tesla's market capitalisation reached below the $1 trillion mark and ended the day at $916 billion. However, the shares returnd to a gain of 1 percent in the extended trading, and are currently trading 6 percent higher in the pre-market activity.

Musk, once a high-level supporter of Trump and a stronghold behind his election win, turned to be critic of the President following the introduction of the Big Beautiful Bill, a sweeping tax and spending package, by the Government. Musk warned the bill could worsen the federal deficit and undermine cost-cutting efforts led by the Department of Government Efficiency or DOGE.

In response, Trump claimed that Musk knew the details of the tax bill but now opposing it after EV incentives were cut, to which Musk denied ever seeing the bill.

In recent days, Trump and Musk have taken their respective social media platforms to shower criticisms on the other.

Following days of fued, on Thursday, Trump on his social media platform Truth Social posted, "Elon was 'wearing thin,' I asked him to leave, I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!"

He also threatened to cancel federal contracts linked to Musk's businesses.

The billionaire business magnet quickly responded on X that without him, Trump would have lost the election.

Musk, who spent almost $300 million in the 2024 campaign to help Trump return to the White House, was appointed as special government employee and in charge of Trump's DOGE with a view to cutting down the size and unwanted expenses of the federal government.

Meanwhile, Musk's ties to Trump had affected Tesla significantly with severe protests at dealerships and brand damage. Tesla's shares had gained following the November 2024 election, but were severely hit since Trump took office in January over Musk's political activities and spending less time for the automaker.

In April, during the company's first-quarter earnings call to discuss the weak performance, Musk had announced his plans to allocate more time to Tesla, and to reduce time with DOGE significantly, starting in May, as the major work of establishing the DOGE was done.

In late May, Musk announced that he was leaving DOGE after leading the cost-efficiency drive. Musk, DOGE, and the Trump administration had made multiple claims of having discovered significant fraud, and saving $160 billion.

The developments are in the backdrop of the electric automaker recording a 71 percent cut in its first-quarter profit, below market estimates, with 9.2 percent drop in revenue as vehicle deliveries declined.

Amid Tesla's declining market price and weak results, there was also a Wall Street Journal report that its board was searching for a replacement for Musk as CEO. Tesla chair Robyn Denholm denied and called the report as "absolutely false" and stated that the Board is highly confident in Musk's ability to continue executing on the exciting growth plan ahead.

The automaker is already facing severe downfall in Europe, with its market share reaching nearly 4 percent, down from nearly 10 percent a year ago. For the first time, Chinese automaker BYD outsold Tesla in Europe with its fully electric models, excluding hybrids. There is growing consumer interest in hybrid vehicles, which now account for over 35 percent of Europe's car market, while Tesla does not offer hybrids.

In late May, the company had said sales in Europe plunged 49 percent in April, even as electric vehicle demand across the continent surged, despite Musk's claim at the Qatar Economic Forum that Europe is a weak market for all automakers.

According to the European Automobile Manufacturers' Association, fully electric vehicle registrations hit a record 184,700 units in April, up 28 percent from the previous year.

In other markets, Tesla, in early June, confirmed it would not take advantage of India's newly launched electric vehicle manufacturing incentives, despite New Delhi's efforts to attract global automakers. Tesla plans to continue importing fully built cars, and to first assess market demand through imports.

On the Nasdaq, Tesla shares declined around 14.3 percent on Thursday's regular trading to close at $284.70. However, the shares gained 0.8 percent in the extended trading to reach $286.99.

As of this writing, shares are gaining 5.5 percent in the pre-market activity and trading at $300.39.