What is the impact of Musk Trump's verbal battle on Tesla?

On June 5th local time, Tesla's stock price suffered a sharp decline, with a single day drop of 14.26% and a market value evaporation of about $150 billion, setting a record for the largest single day drop. The key factor that triggered this stock market turmoil was the intense "war of words" between Tesla CEO Elon Musk and US President Trump. This verbal battle may seem like a conflict between the two, but in reality, there are many complex factors hidden behind it, casting a shadow over Tesla's future development.

The trigger for this verbal battle was a large-scale tax and spending bill implemented by the Trump administration. The adjustment of the tax credit policy for electric vehicles in this bill has touched the interest nerves of Musk and Tesla. Musk has been committed to promoting the development of the electric vehicle industry, and Tesla is a leader in this field. Tax credit policies have a significant impact on Tesla's sales and market competitiveness. The bill not only reduces taxes, medical subsidies, food aid, education, and clean energy spending, but also raises the debt ceiling, allowing the federal government to continue borrowing to finance the debt, but does not include the tax credit policy to encourage the purchase of Tesla electric vehicles. This measure has sparked strong dissatisfaction from Musk, who has publicly criticized the bill multiple times, stating that it undermines his efforts to cut costs in the government efficiency department and will increase the budget deficit.

Trump, on the other hand, believes that Musk's opposition is driven by self-interest, especially after revoking the electric vehicle "mandate," Musk's reaction was extreme. Trump also refuted the view that "if Musk did not provide significant funding during the 2024 presidential election, Trump would not have won" and threatened to terminate Musk's company's government subsidies and contracts. Both sides were back and forth, and the conflict rapidly escalated, evolving from policy discussions to intense verbal battles.

After the verbal war broke out, Tesla's stock price fell in response, which deeply reflects the market's concerns about Tesla's future prospects. For a long time, Tesla's valuation has largely relied on Musk's personal image and the future vision he has outlined for the company. Musk is regarded as an innovator and visionary, and his ideas and decisions have a crucial impact on investor confidence. When he became embroiled in political controversies and clashed fiercely with politicians like Trump, investors began to re-examine Tesla's risks.

From market data, the sharp decline in Tesla's stock price is not accidental. Previously, although Tesla's stock price fluctuated, it was closely related to the overall trend of the relationship between Musk and Trump. Thanks to their close relationship, Tesla's stock price once soared. However, as the contradictions become more public, the market's uncertainty about Tesla's future increases. Investors are concerned that Trump's threat may directly impact Tesla's reliance on government subsidies and contracts, which will further compress Tesla's profit margins. In addition, Musk's political stance and controversial behavior may also lead to resistance from some consumers towards his brand, affecting product sales.

Some consumers may have a negative view of Tesla due to Musk's political stance, and even choose to give up buying Tesla cars. The damage to this brand image, although difficult to measure with specific data in the short term, may have a sustained impact on Tesla's market share and sales performance in the long run. In the fiercely competitive automotive market, consumer trust and goodwill are the key to the survival and development of enterprises. Tesla needs to spend a lot of time and energy to repair its brand image and regain consumer trust.

The verbal battle between Musk and Trump has had a multifaceted impact on Tesla, not only causing a sharp drop in stock price and market confidence, but also bringing about government subsidies, contract risks, and damage to brand image. For Tesla, how to deal with this crisis, resolve conflicts with the government, and reshape its brand image will be a major challenge for future development. And this verbal battle has also sounded an alarm for other enterprises. In the process of development, enterprises not only need to pay attention to technological innovation and market competition, but also need to handle their relationships with political figures and governments carefully to avoid unnecessary risks caused by political factors.