Trump's Feud Takes a Toll on Tesla: $150 Billion Vanishes in a Day
Tesla's market value has plummeted by an astounding $150 billion.
In an unexpected turn of events, Elon Musk, CEO of Tesla, found himself in the midst of a teeth-grinding standoff with President Donald Trump, sending Tesla's stock spiraling downwards. The electric car giant lost over 14% in US trading, expunging a staggering $150 billion from its market value.
According to financial news service Bloomberg, Musk's personal wealth shrank by a whopping $34 billion in just one day, amounting to $293 billion or approximately 293 billion euros.
The turmoil began when Trump opined about withdrawing Musk's company from government subsidies and contracts. Given the US reliance on Musk's SpaceX for astronaut flights and military rocket launches, this statement struck a nerve. In retaliation, Musk advocated for Trump's impeachment on Twitter, fueling the fire further.
Following the US presidential election in November, Tesla's stock soared as investors speculated on potential benefits from Musk's ties to Trump. However, Tesla has been under the scrutiny of various safety regulators for years due to investigations.
The Personal Cost for Musk
As Tesla's stock took a nosedive, the impact on Musk could be more than just professional. Known for securing loans with his Tesla shares, the drop in share prices could potentially force Musk to provide collateral if the price falls below predetermined limits. The 2024 annual report states that Musk pledged nearly 236 million Tesla shares as collateral for loans.
Musk's right-wing political views have also put off some potential Tesla buyers, with protests and arson attacks targeting Tesla vehicles taking place.
Sources: ntv.de, chl/rts/dpa
- Tesla Motors
- Elon Musk
- Donald Trump
- Stock Prices
Behind the Scenes of the Feud
- Root of the Conflict: The feud ignited when Musk voiced his opposition to Trump's proposed tax and budget bill, leading to a series of heated exchanges, including threats to cancel lucrative government contracts[2][3].
- Accusations Thrown: Musk accused Trump of having his name in the files related to the Jeffrey Epstein case, claiming this was why the files remained undisclosed[2]. Trump dismissed Musk's claims.
- Public vs. Private Stance: While Musk hinted at reconciliation, Trump has made it clear he is not interested in mending fences[3].
Implications for Tesla's Business
- Stock Market Volatility: The public feud led to Tesla's shares plummeting, with a reported 14% drop during the height of the conflict[3]. Recovery was seen on Friday, but uncertainty remains[1][3].
- Broader Business Risks: SpaceX and Starlink, also led by Musk, face potential risks as the Trump administration could use regulatory, contract, and subsidy decisions to exert pressure[1].
Wider Implications
- Policy Changes: The feud could influence major policy decisions, including those related to space exploration, brain-chip technology, and telecommunications[1].
- Future Implications: Analysts describe the feud as highly volatile, with the potential to shape not just business outcomes but also political and technological landscapes[1][3].
- The ongoing feud between Elon Musk and President Donald Trump could have wider implications for Tesla, as the conflict might influence policy changes in areas such as space exploration, brain-chip technology, and telecommunications.
- With the drop in Tesla's stock prices, the personal financial cost for Musk could extend beyond the professional realm since he tends to secure loans using his Tesla shares, and a continued decline in prices could potentially require him to provide additional collateral.
