Tesla Inc. (TSLA) Stock: Trump Attacks Musk Over EV Subsidies as Shares Drop 4%

TLDR

Table of Contents

Tesla stock drops over 4% in premarket trading as Trump-Musk feud escalates with Trump attacking Musk over EV subsidies
Trump’s “One Big Beautiful Bill” includes provision to eliminate $7,500 EV tax credit that many Tesla customers use
Musk criticized the spending bill as “utterly insane and destructive” on social media platform X
Tesla deliveries expected to fall 13-20% year-over-year when reported Wednesday, with Wall Street expecting around 355,000-386,000 units
Tesla shares have lost more than 20% of their value this year following ongoing political tensions

Tesla shares plunged more than 4% in premarket trading Tuesday as the public feud between CEO Elon Musk and President Donald Trump reached new heights.

Trump launched a scathing attack on Musk via his Truth Social platform early Tuesday morning. The president accused the Tesla chief of benefiting excessively from government subsidies.

“Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa,” Trump wrote.

BREAKING: Trump says Elon Musk would go broke and return to South Africa without US government subsidies for his businesses pic.twitter.com/7mXr0R4Pqq
— Larry Madowo (@LarryMadowo) July 1, 2025

The attack came after Musk criticized Trump’s “One Big Beautiful Bill” on social media platform X. Musk called the legislation “utterly insane and destructive.”

The Senate bill includes a provision to eliminate the $7,500 new EV tax credit after September. This timeline is faster than the House proposal, which would end the credits by year-end for most vehicles.

Many Tesla customers rely on these tax credits when purchasing vehicles. The company also benefits from battery-storage and solar panel tax credits.

Trump escalated his rhetoric further in his Truth Social post. “No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE,” he wrote.

The president suggested his cost-cutting Department of Government Efficiency should examine Musk’s subsidies. Musk recently stepped down from running DOGE to focus on his businesses.

Political Tensions Mount

The latest clash follows months of deteriorating relations between the former allies. Trump and Musk’s previous public spat on June 5 sent Tesla shares tumbling 14%.

That single-day drop erased more than $150 billion from Tesla’s market capitalization. The stock has struggled to recover since then.

Tesla shares have lost more than 20% of their value this year. The political uncertainty has weighed heavily on investor sentiment.

Musk’s criticism of the spending bill was particularly harsh. “Every member of Congress who campaigned on reducing government spending and then immediately voted for the biggest debt increase in history should hang their head in shame,” he posted.

Delivery Disappointment Looms

Beyond the political drama, Tesla faces operational challenges. The company will report second-quarter deliveries on Wednesday.

Wall Street expects around 386,000 vehicles delivered, down 13% from 444,000 in the same period last year. Some analysts predict even lower numbers around 355,000 units.

This would represent a 20% year-over-year decline. Delivery estimates started the quarter at 500,000 vehicles but fell after disappointing first-quarter results.

Tesla’s first-quarter deliveries already dropped 13% year-over-year. The company is struggling with demand challenges across key markets.

Second-quarter earnings will follow the delivery report. Analysts expect earnings per share of 44 cents, down from 52 cents in the prior year.

At the start of 2025, Wall Street had expected second-quarter EPS of 85 cents. Estimates have steadily declined as the company faces headwinds.

Interestingly, Tesla’s recent robo-taxi launch in Austin, Texas had minimal impact on the stock. Shares rose less than 0.5% following the service debut.

The lack of reaction suggests investors are focused on core business fundamentals rather than future technology promises.

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