Trump-Musk Open War: Tesla Loses $150 Billion in a Day
The explosive consequences of the conflict between the American president and the Tesla CEO for financial markets
The spectacular collapse of a political-financial bromance
The relationship between Donald Trump and Elon Musk has taken a dramatic turn that is shaking up Wall Street. In just a few hours on Thursday, June 5, 2025, what was recently described as a "bromance" has turned into open warfare, sparking a tsunami across financial markets.
Tesla lost $150 billion in market capitalization in just one session, plummeting 14.3%—its worst performance in nearly five years. This tumble perfectly illustrates how political tensions can instantly translate into massive losses for investors.
Timeline of a foretold breakup
The trigger: Criticism of the "One Big Beautiful Bill"
It all began when Musk called Trump’s tax bill a "disgusting abomination". The legislation, known as the "One Big Beautiful Bill Act", notably includes:
- The extension of 2017’s tax cuts
- The gradual phase-out of tax credits for electric vehicles
- An estimated $3.8 trillion increase in the deficit over ten years
The escalation: Threats and accusations
Trump’s response was swift. The president publicly said he was "very disappointed" in Musk before posting on Truth Social: "The easiest way to save billions in our budget is to end Elon’s government subsidies and contracts."
Musk hit back fiercely, stating: "Without me, Trump would have lost the election" and accusing the president of "ingratitude". The peak of this war of words was reached when Musk accused Trump, without evidence, of being involved in the "Epstein files".
Immediate impact on financial markets
Tesla: A historic free fall
Tesla’s stock suffered its biggest single-day drop ever:
- -14.3% at Thursday’s close
- $150 billion in market value wiped out
- Fell below the symbolic $1 trillion mark
- Exceptionally high trading volume
Sector-wide repercussions
The shockwave extended beyond Tesla:
- Trump Media & Technology Group: -8.04%
- Nasdaq: -0.8%
- Electric vehicle sector under pressure
- Uncertainty over SpaceX contracts (worth $22 billion)
Analysis of economic and financial stakes
For Tesla: Multiple challenges
Increased regulatory risks:
- Tighter regulations on autonomous driving possible
- Potential government investigations into "Full Self-Driving"
- Removal of tax advantages for electric vehicles
Business impact:
- Already observed boycotts from Democratic consumers
- Risk of backlash from Trump supporters
- Pressure on already declining sales in Europe and China
For SpaceX: Contracts in jeopardy
Though not publicly listed, SpaceX faces major risks with over $20 billion in government contracts on the line. Musk has also announced the dismantling of Dragon capsules in response to Trump’s threats.
Implications for investors
Investment strategies to reconsider
For Tesla holders:
- Reassess the “Elon Musk premium” estimated at $150-$200 per share
- Stay alert to political developments
- Watch the results of the robotaxi program in Austin
For the tech sector:
- Illustrates the political risks in tech investments
- Importance of geographic and sector diversification
- Increased scrutiny of “politically exposed” CEOs
Opportunities and risks
Potential opportunities:
- Attractive entry price on Tesla for long-term investors
- Possible future reconciliation between the two men
- Continued innovation in electric and autonomous technology
Major risks:
- Escalation of the political conflict
- Loss of Musk’s regulatory influence
- Impact on the Tesla brand
Macroeconomic perspective
Impact on US economic policy
This conflict raises crucial questions:
- Coherence of American industrial policy
- Role of private companies in government programs
- Influence of social media on financial markets
International consequences
- Opportunity for European and Chinese automakers
- Questions around the stability of US public-private partnerships
- Possible redirection of investments to other markets
Conclusion: A lesson in political risk
The Trump-Musk conflict is a textbook case of the impact of political tensions on financial markets. In under 24 hours, $150 billion evaporated, a brutal reminder that even the biggest companies aren’t immune to political turmoil.
For investors and traders, this situation highlights the crucial importance of:
- Accounting for political risk in their analysis
- Not underestimating the impact of social media on prices
- Maintaining appropriate diversification
- Constantly monitoring political warning signals
The era when markets moved independently of the political sphere is over. In this new paradigm, successful trading requires a deep understanding of the interplay between political power and financial performance.
