Tesla (NASDAQ: TSLA) shares slid again on July 1, shedding 5.45% to trade at $301.01 at market open, as tensions between President Donald Trump and Elon Musk escalated into a full-blown political spectacle.
The sell-off came amid renewed criticism from the White House over Musk’s reliance on federal subsidies and speculation about regulatory crackdowns on Tesla and SpaceX.
The year has already been rough for Tesla investors. Shares are down more than 25% year-to-date, driven by weakening global demand, growing EV competition, and a growing backlash tied to Musk’s close, but now fractured association with the Trump administration.
The two had seemed to have put their war of words behind them, however, the rift between the two men widened this week, with Trump attacking Musk on Truth Social, calling him “the biggest subsidy recipient in history” and urging the Department of Government Efficiency (DOGE) to investigate how much taxpayer money flows to his companies.
“Elon would probably have to close up shop and head back home to South Africa” without government help, Trump posted.
Later in the day, during a press gaggle, Trump was asked whether he would consider deporting Musk, a naturalized U.S. citizen. “We’ll have to take a look,” the president said. “We might have to put DOGE on Elon. DOGE is the monster that might have to go back and eat Elon,” he added, referencing the controversial agency Musk briefly led during Trump’s first term.
Impact on TSLA share price
Wedbush Securities analyst Dan Ives weighed in on the fallout, writing:
“This BFF situation has now turned into a soap opera that remains an overhang on Tesla’s stock with investors fearing that the Trump Administration will be more hawkish and show scrutiny around Musk-related US government spending related to Tesla/SpaceX and most importantly the autonomous future with the regulatory environment key to the future of Robotaxis and Cybercabs.”
While the two were once seen as ideological allies in advancing U.S. technology and infrastructure, their relationship now risks becoming a long-term liability for Tesla’s valuation, especially if federal scrutiny over subsidies and regulatory licenses intensifies.
Since Trump returned to office on January 20, Tesla shares have tumbled 29.02%. An investor who bought $1,000 worth of TSLA on January 21, the first trading day of Trump’s second term, would now have just $709.28.
Tesla is also facing operational pressure. The company’s EV sales are declining across Europe and China, two of its most strategically important markets. Analysts cite a combination of increasing competition, price fatigue, and Musk’s political entanglements as contributors to the decline.
