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Shares of Elon Musk’s electric vehicle company, Tesla, declined on Thursday after investor concerns that his ongoing dispute with President Donald Trump could negatively impact the business.
Tesla’s stock fell over 14% due to tensions surrounding a disagreement over the U.S. president’s budget bill. Musk’s remark that Trump wouldn’t have been elected without his support prompted the president to suggest potential federal action against Musk’s companies, including Tesla and SpaceX.
The decline wiped out more market capitalization from Tesla which is higher than the entire valuation of Tata Consultancy Services (TCS), India’s largest IT services firm, which was at $142 billion as of Thursday’s close. TCS is the third-most valued company in India, after Reliance Industries and HDFC Bank.
“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,” Trump wrote on his social messaging service Truth Social. “I was always surprised that Biden didn’t do it!”
The drop on Thursday wiped out nearly $150 billion (Around Rs 12 Lakh Crores) from Tesla’s market value, partially reversing a big runup in the eight weeks since Musk confirmed that Tesla would testing an autonomous, driverless “robotaxi” service in Austin, Texas, this month.
Investors fear Trump might not be in such a rush to usher in a future of self-driving cars in the US, and that could slam Tesla because so much of its future business depends on that.
“There is a fear that Trump is not going to play Mr. Nice Guy when in come to autonomous,” said Wedbush Securities analyst Dan Ives. “The whole goal of robotaxis is to have them 20 or 25 cities next year. If you start to heighten the regulatory environment, that could delay that path.”
Trump’s threat to cut government contracts seem targeted more to another of Musk’s businesses, SpaceX, his privately held rocket company that received billions of dollars to send astronauts and cargo to the International Space Station, provide launches and do other work for NASA. The company is currently racing to develop a mega rocket for the space agency to sent astronauts to moon next year.
On a trip with Trump to the Middle East last month, Musk announced that Saudi Arabia had approved his satellite service for aviation and maritime use. Though its not clear how much politics has played a role, a string of other recent deals for the company in Bangladesh, Pakistan, India and elsewhere has come as Trump has threatened tariffs and sent diplomats scrambling to please the president.
One measure of SpaceX’s success: A private financing round followed by a private sale of shares recently reportedly valued it at $350 billion, up from an estimated $210 billion just a year ago. Tesla shares initially got a lift from his support of Trump.
In the weeks after Trump was elected, Tesla shares soared, hitting an all-time high on Dec. 17. But they gave back those gains during Musk’s time as head of a government cost-cutting group as Tesla’s reputation took a hit. They’ve recently popped higher again after Musk vowed to focus much more on Tesla and its upcoming launch of driverless taxis.
(With Input From Agencies)
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