TLDR
- Tesla stock dropped 5.3% after Trump threatened to cut subsidies for Musk’s companies through DOGE review
- The feud reignited when Musk criticized Trump’s tax and spending bill on social media
- Trump said Musk “may get more subsidy than any human being in history” and could “close up shop” without them
- Tesla bulls Cathie Wood and Daniel Ives remain confident the dispute will resolve quickly
- Ives maintains his $500 price target on Tesla, citing the need for US-China AI competition cooperation
Tesla stock tumbled 5.3% on Tuesday as the public dispute between CEO Elon Musk and President Donald Trump reached new heights. The electric vehicle maker found itself caught in political crossfire after Trump threatened to review subsidies for Musk’s companies.
The conflict erupted when Trump posted on Truth Social that Musk “may get more subsidy than any human being in history.” Trump suggested the Department of Government Efficiency should examine these subsidies closely.
“Without subsidies, Elon would probably have to close up shop and head back home to South Africa,” Trump wrote. The president added that cutting these subsidies could save the country “a fortune.”
The feud stems from Musk’s recent criticism of Trump’s tax and spending bill. The Tesla CEO has been vocal about his opposition to the legislation on social media platform X.
Musk responded to Trump’s post with a defiant message: “I am literally saying CUT IT ALL. Now.” This response came after Trump warned that Musk could “lose a lot more” than just electric vehicle mandates.
The timing creates challenges for Tesla’s business operations. The company’s robotaxi development depends heavily on government regulatory approvals for autonomous vehicles.
SpaceX, another Musk company, relies on NASA and Department of Defense contracts. These relationships could face scrutiny if the political tensions continue.
Market Reaction and Analyst Views
Tesla bulls remain optimistic despite the political drama. Cathie Wood, the prominent hedge fund manager, believes “this too shall pass.”
Wood continues to see Tesla reaching multi-trillion-dollar valuations through its Full Self-Driving technology. Her confidence in the company’s long-term prospects hasn’t wavered.
Wedbush analyst Daniel Ives maintains his bullish stance on Tesla stock. He kept his Buy rating and $500 price target, which represents 66% upside from current levels.
Ives argues that both Trump and Musk need each other for America’s artificial intelligence competition with China. He expects the situation to “settle” because of these mutual interests.
Political Background Creates Uncertainty
Musk previously led the Department of Government Efficiency early in Trump’s administration. He left that role in late May before the current tensions escalated.
The billionaire CEO has been critical of Republican spending plans. On Monday, Musk suggested on X that it was “time for a new political party that actually cares about the people.”
Trump expanded his criticism during Tuesday morning press conferences. He told reporters that DOGE would examine Musk’s subsidies and warned against “playing that game with me.”
The president reiterated his position that Musk benefits heavily from government support. Trump suggested these subsidies are essential to Musk’s business operations.
This marks the second major public dispute between the two figures. A similar feud in early June caused Tesla stock to sell off before tensions cooled.
Tesla shares had recovered more than 11% since June 5 before Tuesday’s decline. The stock remains down 25.5% year-to-date despite recent gains.
Analysts on TipRanks maintain a Hold consensus rating on Tesla. The average price target of $287.39 suggests 4.4% downside from current levels based on 13 Buy, 12 Hold, and 9 Sell ratings.
Trump warned Tuesday morning that Musk is “upset that he’s losing his EV mandate” but could face greater losses if the feud continues.
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