Tesla is having a turbulent year—not only due to its disappointing Q1 2025 financial results, but also because of the collateral damage from a political showdown that threatens to undermine its long-term value. The public fallout between Elon Musk and President Donald Trump—once strategic allies—has wiped out hundreds of billions in market value and introduced a new layer of uncertainty for the automaker.

Tesla’s stock surged after Trump’s electoral win in November 2024, fueled by market optimism and Musk’s visible role in the campaign, where he publicly backed the administration’s deregulatory agenda, government efficiency push, and nuclear energy expansion. But since then, the stock has been on a steady decline—one that accelerated following their recent public clash.

Disappointing first quarter

In Q1 2025, Tesla reported $19.34 billion in revenue—well below Wall Street’s expectation of $21.35 billion. Earnings per share came in at $0.27, far from the projected $0.41. Vehicle deliveries dropped 13% year-over-year, and automotive revenues fell by 20%.

Some analysts suggested the sales drop may reflect a form of consumer backlash in various countries, as a reaction to Musk’s alignment with a U.S. administration viewed as aggressively anti-immigrant and confrontational with traditional trade partners.

A fallout that rocked the markets

Then came the tipping point: Musk and Trump split publicly in a bitter dispute. The breaking point was the passage of the One Big Beautiful Bill Act in the House of Representatives—Trump’s signature tax and spending legislation—which, among other provisions, eliminates key subsidies for electric vehicles and prioritizes fossil fuel incentives, rural programs, and military-industrial investments. Musk responded sharply, calling the bill a “disgusting abomination” and warning that it would explode the U.S. fiscal deficit.

Trump quickly fired back, publicly suggesting the federal government should reexamine contracts with Musk’s companies—including Tesla and SpaceX. His allies began pushing for audits and new regulatory scrutiny.

The immediate consequence was market-driven: Tesla’s stock plunged 14.3% in a single day, wiping out $150 billion in market value. From its post-election peak of $1.42 trillion in market capitalization, Tesla has lost $470 billion—down 33%. As of June 6, 2025, the company’s market cap stands at around $950 billion.

Political risk front and center

Unlike past crises—triggered by production issues, recalls, or Chinese competition—this one is political. What once seemed like an alliance between two titans of economic and technological power has turned into open warfare. And investors are worried.

Musk has also lost support in some sectors that once saw him as a pragmatic figure. Today, his feud with Trump highlights his vulnerability to political volatility—at a time when Tesla is facing rising competition, shrinking margins, and dimmer growth prospects.

Is there a way out?

Some analysts believe reconciliation is still possible and could ease pressure on Tesla’s stock. But others argue the relationship is broken beyond repair, and that Tesla will have to forge new paths to regain investor confidence.

For now, the story is clear: a company that rose on innovation and proximity to power now finds itself trapped in the unpredictable logic of political confrontation. And that is not a good sign for the long haul.