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Trump-Musk Feud Triggers $150 Billion Wipeout in Tesla Market Value

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Tesla shares plummeted 14% on Thursday, erasing $150 billion in market value, as a public feud between U.S. President Donald Trump and Tesla CEO Elon Musk rattled investors. The stock selloff occurred despite no major company-specific news, as traders reacted to escalating tensions between the two high-profile figures.

The dispute began when Trump criticized Musk’s opposition to his administration’s tax bill, which includes provisions that would eliminate federal subsidies for electric vehicle (EV) purchases. Musk responded by attacking Trump’s policies on social media, further intensifying the confrontation. Trump later escalated his rhetoric, suggesting that terminating government subsidies and contracts with Musk’s companies could save the federal government billions of dollars.

The spat poses multiple risks for Tesla, especially as it tries to navigate a shifting regulatory landscape. The U.S. Transportation Department, which regulates vehicle safety standards, could become an obstacle to Musk’s ambitions of mass-producing autonomous robotaxis — a cornerstone of Tesla’s future growth strategy. The department is also investigating Tesla’s Full Self-Driving system following a fatal crash.

“Elon’s politics continue to harm the stock,” said Dennis Dick, chief strategist at Stock Trader Network. “First he aligned with Trump, upsetting Democratic buyers. Now he’s alienated the Trump administration.” Analysts warn that political fallout could also influence regulatory decisions that disproportionately affect Tesla, particularly if regulators mandate technologies like lidar, which Tesla currently avoids in favor of camera-based systems.

The market rout has also dented Musk’s personal wealth. Following Thursday’s selloff, his net worth fell by roughly $27 billion to $388 billion, according to Forbes.

Investors are increasingly concerned about Tesla’s exposure to political headwinds as well as its heavy reliance on government incentives. Trump’s budget proposal includes ending the popular $7,500 EV subsidy by late 2025, which could slash Tesla’s annual profit by $1.2 billion and hit regulatory credit sales by an additional $2 billion, according to J.P. Morgan estimates.

Despite these risks, Tesla remains the most valuable automaker globally with a market capitalization of around $1 trillion — more than triple that of Toyota. However, some investors question the stock’s lofty valuation, which trades at 150 times profit estimates. “I am short Tesla. I don’t understand its valuation or fundamentals. I think it’s overhyped,” said Bob Doll, chief investment officer at Crossmark Global Investments.

Tesla’s stock has been highly volatile since Musk endorsed Trump’s reelection bid in mid-2024. After an initial 169% surge, shares have since fallen 54% amid protests and weakening sales in major markets including Europe, China, and key U.S. states like California.

While Transportation Secretary Sean Duffy has already moved to ease some autonomous vehicle safety regulations, experts caution that federal regulators could still shape rules in ways that disadvantage Tesla. “With President Trump, being on his bad side always creates risk,” said Morningstar analyst Seth Goldstein, though he noted that broader industry pressure may limit targeted retaliation.

Ultimately, analysts suggest the political drama could overshadow Tesla’s ambitious AI and autonomous driving plans, which Wedbush previously valued at up to $1 trillion in potential market capitalization.

Tesla to Launch Robotaxi Trial in Austin by End of June, Says Elon Musk

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Tesla is preparing to begin its much-anticipated robotaxi pilot program in Austin, Texas, by the end of June, CEO Elon Musk confirmed in an interview with CNBC. The trial marks a significant milestone for the electric carmaker’s shift toward autonomous driving and AI-driven products.

Initially, Tesla plans to deploy about 10 self-driving vehicles in select “safest” parts of Austin, with the goal of scaling up to approximately 1,000 cars over the following months. The launch comes at a critical time for Tesla, as global sales have slowed amid growing EV competition and mounting scrutiny of Musk’s political affiliations and side ventures.

Musk emphasized that Tesla’s long-term future hinges on autonomy and its humanoid robot project, Optimus. “The only things that matter in the long term are autonomy and Optimus,” he stated, underlining the strategic pivot away from building a low-cost EV platform.

The robotaxi launch will face close examination from the U.S. National Highway Traffic Safety Administration (NHTSA), which is currently investigating incidents involving Tesla’s Full Self-Driving (FSD) software, particularly in low-visibility conditions. The regulator recently asked Tesla to detail how its robotaxis will operate in adverse weather.

Meanwhile, Musk revealed that Tesla is in licensing discussions with major automakers interested in using its FSD software — a potential revenue stream that could help commercialize the robotaxi platform faster.

Beyond Tesla, Musk’s AI startup xAI is also making headlines. The company is expanding a massive supercomputer cluster named “Colossus” in Memphis, Tennessee, which will feature one million of Nvidia’s Blackwell chips — part of a broader plan to train advanced AI models. xAI recently acquired a 1-million-square-foot property in Memphis to support the buildout.

While a merger between Tesla and xAI is not currently planned, Musk did not rule it out entirely, stating it would require shareholder approval if it were to move forward.

Tesla Ditched Robotaxi Lease Plan, Sold Returned Vehicles for Profit Instead

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Tesla quietly ended a years-long policy that blocked U.S. customers from buying their leased vehicles, a policy originally justified by CEO Elon Musk’s 2019 claim that returned cars would be used in the company’s upcoming “robotaxi” network. The autonomous fleet never materialized — and instead, Tesla flipped many of the off-lease vehicles for profit through resale, according to a Reuters investigation citing multiple sources familiar with Tesla’s retail operations.

Background: The Robotaxi Promise

In 2019, Musk publicly stated that Tesla would not allow lease buyouts because it needed the vehicles back for its planned fleet of self-driving robotaxis, claiming:

“Next year, for sure, we’ll have over 1 million robotaxis on the road.”
This never happened. Instead, Tesla:

  • Upgraded returned cars with high-margin software features like “Full Self-Driving” ($8,000–$15,000) and “acceleration boost” ($2,000)

  • Resold them to new customers at higher prices than lease-end buyouts would have yielded

  • Blocked lessees from buying vehicles for years, citing the robotaxi plan that never materialized

Lease Policy Reversal

On November 27, 2023, Tesla quietly reversed the policy. A post from its North America X account (formerly Twitter) announced that “Lease buyout now available” for new contracts. Its website was also updated to reflect that leased cars “may be eligible for purchase” — a major shift after years of denying customers that right.

Legal but Misleading

While Tesla’s no-buyout lease terms were likely legal, critics argue they were deceptive, especially given Tesla’s continued robotaxi narrative. Many lessees were led to believe their cars were headed for autonomy, only to discover they were sold in secondary markets.

  • Joe Mendenhall, a lessee from Indiana, was told multiple times his Model Y was bound for robotaxi duty. He later learned it was auctioned off:

“Lies about not being able to buy out my lease,” he posted.

  • Another customer, Marshall Distel, expressed regret over his association with Musk, saying:

“I love the car, I just don’t like what has been going on at the top with the CEO.”

Business Strategy Masked by Autonomy Claims

Tesla’s strategy of reselling off-lease cars at inflated prices was financially lucrative — especially when used car prices soared during the pandemic. However, now that demand has cooled and used Tesla prices are plummeting, the company appears to have changed course.

  • Tesla vehicles now depreciate faster than most EVs, with used Model Y prices falling 14.1% and Cybertruck prices plunging 46% over the last year, according to CarGurus.

  • During the January earnings call, Tesla CFO Vaibhav Taneja acknowledged “lower profit from used car business” as a reason for margin decline.

Investor Illusion

The robotaxi story also helped sustain investor confidence — contributing to Tesla’s high stock valuation despite lack of profitability from full autonomy. Firms like Ark Investment cited Tesla’s off-lease fleet as a potential base for an autonomous ride-hailing service, a belief now shown to be based on unfulfilled assumptions.

Conclusion

Tesla’s abandoned robotaxi lease plan reflects a broader pattern of overpromising and underdelivering on autonomous driving, while capitalizing on consumer and investor expectations. As the company faces softening demand, depreciating assets, and growing political backlash, its strategic pivots — and past missteps — are drawing renewed scrutiny.