Tesla plunges as Musk and Trump's relationship blows up
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President Trump speaks out against a boycott of Elon Musk's companies on March 11 and said he would purchase a Tesla. Photo: Andrew Harnik/Getty Images
Tesla shares plunged Thursday as the relationship between Elon Musk and President Trump imploded and Trump suggested canceling Musk's government contracts.
Why it matters: The threat escalates their real-time breakup and threatens to deliver a serious blow to the wealth of the world's richest person.
- Musk and Trump were close political allies for a time, after the Tesla CEO poured hundreds of millions of dollars into Republican campaigns and led the budget-slashing Department of Government of Efficiency.
- Their relationship was seen as a boon to Tesla and Musk's other companies, including government contractor SpaceX.
Zoom in: After saying earlier from the Oval Office that "Elon and I had a great relationship" and "I don't know if we will anymore," Trump went further Thursday in a Truth Social post, threatening that he could "terminate" government contracts with Elon Musk's empire.
- "The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts," Truth said on Truth Social.
- "I was always surprised that Biden didn't do it!"
- The comments came after Musk repeatedly assailed Trump's "big, beautiful bill" in recent days, saying it would unacceptably increase the national debt and wipe out DOGE's budget savings.
- On Thursday, Musk began reposting pre-presidency Trump tweets promoting a balanced budget and arguing against a debt ceiling increase.
Threat level: Any move to follow through on the contract termination threat would have the most significant effect on SpaceX, which counts NASA and the Defense Department as major customers.
- For example, NASA has a $4.46 billion contract with SpaceX for the design, development and production of a human landing system.
But the sudden divide between Trump and Musk also dealt a significant blow to Tesla's stock price.
- Shares of Musk's EV company plunged 16% in late trading Thursday, knocking more than $180 billion off of Tesla's market capitalization and costing Musk personally more than $21 billion.
- The downward trajectory suggests that investors are worried that a Musk-Trump breakup could hurt the empire of the world's richest person, which also includes xAI and Neuralink.
- Musk did not immediately respond to a request for comment.
Threat level: Tesla investors have been hoping for favorable policies from Washington, including for EVs and self-driving cars.
- But as Musk falls out of favor on Capitol Hill, congressional Republicans will have little political reason to hold back on their war on EVs.
Reality check: Tesla doesn't get significant revenue from federal contracts.
- And Musk's net worth was still $368 billion as of Thursday, down $64 billion for the year but still $100 billion+ more than the nearest person, according to the Bloomberg Billionaires Index.
The bottom line: Investors once believed that Musk's association with Trump would deliver huge value to his empire.
- Now it looks like their disassociation is doing the opposite.
Editor's note: This story has been updated with more details throughout.
