Elon Musk’s War of Words With Trump Sparks Tesla’s Biggest Stock Plunge in Five Years—What It Means for Investors in 2025
Tesla shares nosedive after Trump targets Musk’s federal contracts. What’s next for TSLA, federal spending, and investors?
- Tesla lost $151B in market value on Thursday
- Shares plunged 18% intraday, closed down 14.3%
- SpaceX has received almost $20B in U.S. contracts since 2008
An ugly, headline-grabbing fight between Tesla CEO Elon Musk and former President Donald Trump rattled markets Thursday, as Trump threatened to cut off Musk’s federal contracts—sending Tesla shares tumbling in their worst single-day crash since 2020.
The fallout was swift and massive. Tesla stock plummeted 18% at its lowest, wiping out a staggering $151 billion in market value before trimming losses to close the day down 14.3%. The aftershocks continued in after-hours trading, further fueling investor anxiety.
The battle began as Congress rushed to pass Trump’s flagship “big, beautiful bill” by July 4. When Musk blasted the bill’s $2.4 trillion increase to the deficit as “a disgusting abomination,” Trump retorted on his Truth Social app, proposing to slash federal spending by axing government deals with Musk’s companies—particularly SpaceX, which is deeply reliant on federal dollars.
Tech analysts described the dispute as a dramatic turn from cordiality to open warfare, giving sleepless nights to investors and raising questions about the future of Tesla and the broader EV market.
Why Did Tesla Shares Crash So Hard—And What Was Trump’s Threat?
Trump’s broadside against government contracts for Musk’s businesses hit a nerve. SpaceX has won nearly $20 billion in federal contracts since 2008—vital lifelines for its ambitious space projects. With the former president calling out these deals as budget busters, Wall Street panicked over what a clampdown could mean for growth.
The clash came as Musk used X (formerly Twitter) to accuse both Trump and Republican lawmakers of ignoring the 80% of Americans in the political center, and even floated the idea of launching a new political party.
How Are Investors Responding to the Trump-Musk Feud?
Market analysts say the public spat has “sent shivers down the backs of Tesla investors.” Volatility is soaring as traders grapple with the prospect of government intervention in one of America’s most influential tech firms.
Many on Wall Street fear the drama will escalate, leading to long-term uncertainty for Tesla, SpaceX, and even the entire U.S. EV sector. Visit CNBC for real-time market moves and ongoing reactions.
What’s Next for Tesla, SpaceX, and Federal Contracts in 2025?
As Congress races to pass the contentious bill, observers are asking:
- Will the federal government really pull contracts from Musk’s companies?
- How will these threats affect Tesla’s expansion and innovation?
- Could Musk’s idea of a new political party reinvent the political landscape?
Experts suggest Tesla remains a pivotal player, but future revenue growth could face headwinds if government dollars disappear. For now, all eyes are on Washington and Tesla’s next moves.
How Can Investors Protect Themselves Amid Political Volatility?
Sharp drops like Thursday’s underscore why investors need strategies for weathering political fireworks. Here’s how you can prepare:
- Monitor news from trusted sources like Reuters and The Wall Street Journal
- Diversify holdings across tech, energy, and defense industries
- Set stop-loss orders to manage sudden downside risk
- Revisit your investment goals as global and U.S. policy shifts
Stay alert to the wild ride ahead—Tesla, Musk, and Washington are just getting started.
Checklist: What Should Investors Do Next?
- Track updates from Congress and the White House daily
- Rebalance your portfolio to limit overexposure to Tesla and EV stocks
- Consult with a professional advisor to navigate market volatility
- Watch Musk’s communications on X for strategic business shifts
- Stay informed on contract renewals for SpaceX and other Musk ventures
Don’t blink—historic market moves are unfolding. Stay tuned, adapt fast, and protect your investments amid the Musk-Trump faceoff!