A Political Alliance Turns Sour
The once-strong alliance between President Donald Trump and Tesla CEO Elon Musk has deteriorated into a public feud, primarily over the administration's proposed "One Big Beautiful Bill Act." This legislation aims to cut federal spending but includes provisions that eliminate electric vehicle (EV) subsidies, a move Musk vehemently opposes.
Musk criticized the bill as a "disgusting abomination," arguing that it unfairly targets EV incentives while maintaining subsidies for fossil fuels. He also warned that the bill could increase the federal deficit by $2.5 trillion, aligning with a Congressional Budget Office forecast. According to reporting by Business Insider and The Australian.
Public Exchanges and Accusations
The dispute escalated through a series of public exchanges on social media platforms X (formerly Twitter) and Truth Social. Trump expressed disappointment in Musk, stating, "Elon and I had a great relationship. I don’t know if we will anymore." He further accused Musk of being motivated by personal financial interests due to the potential loss of EV subsidies.
In response, Musk claimed that "without me, Trump would have lost the election," highlighting his significant financial contributions to Trump's campaign. He also suggested forming a new centrist political party, indicating a potential shift in his political affiliations.
The feud intensified when Musk accused Trump of being mentioned in the Jeffrey Epstein files, implying that this connection was the reason for the files being withheld.
Market Impact: Tesla's Record Loss
The public fallout has had immediate repercussions on the financial markets. Tesla's stock plummeted over 14% on June 5, erasing approximately $152 billion in market capitalization—the largest single-day dollar loss in the company's history.
Analysts attribute the sharp decline to investor concerns over the potential elimination of EV tax credits, which could significantly impact Tesla's profitability. JPMorgan estimates that the loss of these credits could reduce Tesla's annual profits by $1.2 billion.
Additionally, Tesla faces challenges in international markets, with sales in China falling 15% year-over-year and German sales plunging 36%, contributing to an estimated 9% drop in Q2 deliveries , as reported by FXStreet.
Broader Political and Economic Implications
The Musk–Trump feud underscores the complex interplay between politics and business, especially in sectors heavily influenced by government policy. Musk's public criticism of the administration's fiscal policies and his suggestion to form a new political party indicate a potential realignment in political alliances within the tech industry.
Furthermore, the dispute has sparked discussions about the role of government subsidies in promoting clean energy and the potential consequences of abrupt policy shifts on emerging industries like electric vehicles.
Conclusion
The unraveling of the Trump–Musk relationship has not only led to significant financial losses for Tesla but also raised questions about the stability of public-private partnerships in the face of political disagreements. As the situation continues to evolve, stakeholders across industries will be closely monitoring the implications for policy, markets, and the broader economy.
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