Tesla Stock Rebounds Amid Musk-Trump Feud: Will Political Fallout Hurt EV Giant?

Despite hints of a potential reconciliation, fuelled by recent media reports, hopes dimmed when a White House official indicated that Trump had no intention of engaging with Musk.

The conflict intensified after Musk ramped up criticism of Trump’s proposed tax legislation, which includes ending the $7,500 electric vehicle tax credit by late 2025.

Source : Archello

Tesla shares bounced back on Friday after a bruising selloff triggered by tensions between CEO Elon Musk and  US President Donald Trump. The brief market recovery, however, did little to dispel uncertainty over the future of the strained relationship between the two influential figures.

The electric vehicle giant’s stock climbed nearly 4 per cent, reversing some of the losses from Thursday’s sharp decline. The prior session had seen a $152 billion wipeout in Tesla’s market value after Musk and Trump publicly clashed over a contentious tax and spending bill, reported Reuters.

Despite hints of a potential reconciliation—fuelled by a Politico report suggesting the two might speak—hopes dimmed when a White House official indicated that Trump had no intention of engaging with Musk.

In an interview with CNN, Trump dismissed any possibility of a dialogue, stating, "I'm not even thinking about Elon," and added, "he's got a problem."

Tensions Over EV Tax Incentives Deepen Feud

The conflict intensified after Musk ramped up criticism of Trump’s proposed tax legislation, which includes ending the $7,500 electric vehicle tax credit by late 2025. Musk’s critique sparked a retaliatory response, with Trump hinting at cutting federal contracts tied to Musk-owned companies, including aerospace firm SpaceX.

Social media activity suggested Musk might be open to repairing ties, as he engaged with users on X who advocated for de-escalation. Still, the long-term outlook remains clouded.

"It might be a bit too hopeful to think their relationship will ever go back to what it once was, but if cooler heads prevail and the tension eases, that would definitely be a big improvement for Tesla," said Matthew Britzman, a Tesla shareholder and analyst at Hargreaves Lansdown.

Political Fallout Threatens Tesla’s Broader Ambitions

The Musk-Trump dispute has broader implications for Tesla's operations. Regulatory decisions by the US Transportation Department, particularly concerning autonomous vehicles without steering wheels or pedals, could be influenced by the political climate.

Tesla declined to comment on the matter, the report noted. Despite recent volatility, Tesla’s valuation remains high—trading at 120 times projected earnings, a premium compared to legacy automakers and even tech leaders like Nvidia.

Tesla stock has faced instability since last July when Musk publicly endorsed Trump’s presidential campaign. While early investor enthusiasm centred around potential regulatory relief for robotaxis, weaker sales and backlash to Musk’s political positions have since weighed heavily on the brand.

Initially, analysts anticipated that growing interest from conservative buyers would offset backlash from liberal consumers. However, that safety net now appears to be fraying.

"With Musk alienating Republicans, there is no one left to prop up consumer sentiment towards Tesla, which could lead towards a full-scale collapse in brand perception," warned Evan Roth Smith, political strategist and co-founder of Slingshot Strategies.