Elon Musk’s Trump Fallout Rattles Tesla Investors.
When Elon Musk recently announced he was stepping back from politics, investors were hopeful he would redirect his energy toward the many tech companies he leads. But his explosive public clash with US President Donald Trump—and the airing of Trump’s White House “dirty laundry”—suggests Musk’s shifting priorities may not bring the focus they’d hoped for.
Rather than retreating from the spotlight to concentrate on Tesla and his other ventures, Musk now finds himself facing a boycott threat from one of his biggest customers: the federal government under Trump.
On Thursday, Tesla shares plunged 14% after Musk lashed out at Trump on social media. They rebounded slightly on Friday as tensions appeared to ease, but for investors and analysts who have long wanted Musk to put down his phone and return to work, the situation remains troubling.
Deeper Business Woes?
Some argue Musk’s troubles extend well beyond this political spat. For veteran tech journalist Kara Swisher, Tesla’s problems run deeper. “Tesla’s finished,” she told the BBC at the San Francisco Media Summit. “They could compete in the autonomous taxi space—but they’re way behind.”
Indeed, Tesla has struggled to catch up to Waymo, owned by Google’s parent company Alphabet, whose driverless taxis already operate in multiple US cities. Musk is expected to oversee the launch of Tesla’s autonomous robo-taxis in Austin, Texas this month and recently claimed the company has been testing driverless Model Ys.
Wedbush analyst Dan Ives believes this could be a “watershed moment,” adding, “90% of Tesla’s future value is in autonomy and robotics.” Still, with Musk’s attention divided, the odds of success appear slimmer.
Distraction or Disinterest?
There's also growing concern about Musk’s own motivation. In Silicon Valley, the question isn’t just whether Musk can turn things around—but whether he even wants to.
“He’s powerful when focused,” said Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management. “Before, he had something to prove—EVs, rockets. Now, not so much.”
Gerber, a longtime Tesla investor, has begun reducing his stake since Musk’s political turn. After Thursday’s drop, he called it “an extremely painful day,” criticizing Musk’s public feud with Trump as “the dumbest thing you could possibly do.”
Grassroots Backlash and TeslaTakedown
Even before his rift with Trump, Musk faced mounting opposition from the grassroots movement TeslaTakedown, with nationwide protests erupting every weekend since Trump’s return to office.
In April, Tesla reported a 20% decline in vehicle sales and a 70% drop in profits for Q1. Protesters argue the issue isn’t just Tesla—it’s Musk himself.
“It’s about how Tesla stock has been weaponized to give Musk unchecked power,” said disinformation researcher Joan Donovan, who helped lead the campaign.
Another source of criticism: X, formerly Twitter. “He bought it for clout,” Donovan said, “to reach millions instantly.”
Brand Damage or Redemption?
Still, could the public fallout with Trump help rehabilitate Musk’s image among former supporters?
Tech analyst Patrick Moorhead thinks it’s possible. “We’re a forgiving country,” he said. “These things take time, but it’s not unprecedented.”
Kara Swisher drew a comparison to Bill Gates, once seen as “the Darth Vader of Silicon Valley,” who ultimately reshaped his reputation. Musk, she said, may yet grow—but is “clearly troubled.”
High Stakes for SpaceX
Musk’s fate may not be his alone to decide. Trump has suggested cutting off his government contracts—estimated at \$38 billion—largely benefiting SpaceX. While the threat sounds dire, its feasibility is unclear.
SpaceX’s Dragon spacecraft is essential to NASA operations, regularly ferrying astronauts and cargo to the International Space Station. The company’s deep ties to national security and space infrastructure could make severing contracts politically and logistically difficult.
Similarly, Starlink—Musk’s satellite internet service—has few ready replacements.
That said, Musk has limits too. Amid the feud, he threatened to decommission Dragon, only to backtrack shortly after, replying to an X user who advised him to “cool down”: “Good advice. Ok, we won’t decommission Dragon.”
Mutual Dependency
The Musk–Trump alliance may be over, but their mutual reliance endures. The future of Musk’s companies—particularly Tesla and SpaceX—will likely remain entangled with political dynamics beyond his control.
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