Tesla Shares Rebound After £120 Billion* Wipe-Out, Yet Trump-Musk Feud Smoulders
*($152 billion at today’s rates)
Quick Take-Aways
Shares bounce back: Tesla stock rose about 4 % on Friday, clawing back a slice of Thursday’s 14 % plunge that erased roughly £120 billion in market value. (reuters.com)
Political storm still brewing: U.S. President Donald Trump says he is “not even thinking about Elon”, signalling no interest in patching things up with his once-ally.
Trigger for the rift: Musk publicly slammed Trump’s flagship tax-and-spend bill, which would scrap the £5,900 ($7,500) federal EV credit from 2026.
Possible detente? A Politico leak hinted at a private call between the pair, but the White House quickly poured cold water on the idea.
Valuation still lofty: Even after the fall, Tesla trades at about 120 × forward earnings, far richer than most car-makers and even many tech giants.
1. A Bumpy Friday Relief Rally
After Thursday’s dramatic slide, Tesla shares steadied with a 4 % rise in early U.S. trade. The uptick came as investors latched on to vague hopes of a cease-fire in the Trump–Musk war of words. Yet the bounce retraced only a fraction of the prior day’s record £120 billion market-cap loss.
2. How the Fallout Started
The feud burst into view when Elon Musk labelled the President’s “Big Beautiful Bill” a “disgusting abomination”, warning that it would balloon U.S. debt while gutting the popular EV incentive. In response, Mr Trump threatened to slash federal contracts with Musk-controlled firms such as SpaceX and Starlink.
3. White House: “No Call on the Diary”
Politico briefly reported that aides hoped to broker a conciliatory phone chat. Hours later, a senior White House official insisted no call was planned and the President had “other priorities”. Speaking to CNN, Mr Trump added bluntly: “I’m not even thinking about Elon. He’s got a problem.”
4. What’s at Stake for Tesla?
Regulation: The U.S. Transportation Department must sign off any pedal-free, steering-wheel-free robotaxis—one of Musk’s signature ambitions. A hostile administration could slow approvals.
Contracts: SpaceX launches national-security satellites and resupplies the ISS. Losing those government deals would hit Musk’s wider empire as well as investor confidence in Tesla.
Brand perception: Analysts note Tesla’s reputation has wavered since Musk threw his support behind Mr Trump last July. Republican-leaning buyers cushioned sales at first, but the latest row risks repelling both right- and left-leaning consumers.
5. Analyst and Investor Reactions
“If cooler heads prevail the stock could stabilise, but right now the politics are overshadowing the product,”
Matthew Britzman, Hargreaves Lansdown.
Political strategist Evan Roth Smith warned that alienating both parties could trigger “a full-scale collapse in brand perception”.
6. The Valuation Conundrum
Even after a 29 % year-to-date drop, Tesla changes hands at roughly 120 times forecast earnings. By comparison, legacy car-makers trade in single digits and chip-maker Nvidia hovers near 30×. Supporters argue the multiple bakes in long-term robotaxi and energy-storage growth; sceptics call it “priced for perfection” in an increasingly hostile policy climate.
7. What Could Happen Next?
Senate votes on the bill: If the EV credit survives, near-term demand may hold up; if it vanishes, Tesla faces a possible price crunch.
SpaceX contract reviews: Watch for signals from the Pentagon and NASA—any pause or penalty would rattle markets.
Mid-term election calculus: Musk has hinted at cutting political donations; that could weaken Republican campaign coffers and perhaps soften Trump’s stance.
Bottom Line
Friday’s modest rebound offers only a temporary balm. Until the presidential palace and the Gigafactory bury the hatchet, Tesla shareholders must brace for tweet-driven turbulence—and the very real policy risks that lie beneath.
Sources
Reuters – “Tesla shares gain after $152 billion sell-off, but Trump-Musk truce uncertain” (reuters.com)
Reuters – “Trump is not interested in talking to Musk as they feud over tax-cut bill”
Politico – “The Trump-Musk split could leave Tesla politically homeless”
(All currency conversions use £1 = $1.27 for illustrative purposes.)