New York – Tesla’s market capitalization has nosedived by 29% in 2025, with the company losing $380 billion in value, equivalent to roughly ₹32 lakh crore, according to Bloomberg data. The sharp decline follows a public feud between Tesla CEO Elon Musk and President Donald Trump, once allies but now fierce adversaries. Tesla, which started the year as the world’s eighth-largest company, has slipped to tenth, marking its worst performance among large-cap stocks this year.

Tesla’s 14% Single-Day Plunge
On June 6, Tesla shares cratered by 14%, wiping out $150 billion in market value in a single day—one of the largest single-day losses for any company in history. The drop was triggered by Trump’s social media post threatening to terminate government contracts with Tesla and SpaceX, Musk’s aerospace venture. The threat came amid escalating tensions over a proposed tax bill, which Musk has publicly opposed. The bill eliminates mandates for electric vehicles (EVs) and scraps a $7,500 EV purchase discount, provisions that directly threaten Tesla’s business model.

Roots of the Musk-Trump Rift
The rift stems from Musk’s opposition to Trump’s tax reform, which aims to cut taxes, boost defense spending, and enhance border security. Musk, a vocal critic of the bill’s anti-EV measures, argues it undermines the clean energy transition. Trump, in response, has accused Musk of prioritizing personal interests over national priorities. The feud marks a dramatic reversal from Musk’s earlier support for Trump, including his role as a key advisor in the administration’s Department of Government Efficiency (DOGE). Musk’s aggressive cost-cutting measures in DOGE, including mass layoffs of federal workers, have also sparked public backlash, with protests and vandalism targeting Tesla showrooms across the U.S.

Wider Impact on Musk’s Empire
The fallout extends beyond Tesla. SpaceX, which relies heavily on NASA and Pentagon contracts, faces uncertainty due to Trump’s threats. A Morgan Stanley report estimates that losing government contracts could cost SpaceX up to 30% of its annual revenue. Meanwhile, Tesla’s brand image has taken a hit, with a YouGov poll showing a 12% drop in consumer favorability since January 2025. Analysts warn that continued political sparring could further erode investor confidence. “Musk’s public battles are a double-edged sword—his boldness drives innovation but risks alienating stakeholders,” said Wedbush Securities analyst Dan Ives.

Musk’s Response and Market Outlook
Musk has doubled down, posting on X that he will fight “anti-innovation policies” tooth and nail. However, investors remain jittery. Tesla’s stock is down 45% from its 2024 peak, and short-sellers have raked in $3.2 billion betting against the company, per S3 Partners. The EV market is also facing headwinds, with global demand growth slowing to 8% in 2025 from 15% in 2024, according to the International Energy Agency. Despite the turmoil, some analysts see a silver lining. “Tesla’s fundamentals—its tech and production scale—remain strong. A resolution to this feud could spark a rebound,” said Goldman Sachs’ Mark Delaney.

Public and Political Backlash
Musk’s DOGE tenure has fueled public outrage. His push for efficiency led to 50,000 federal job cuts, prompting protests in cities like Chicago and Los Angeles. Vandals defaced Tesla stores, with damages estimated at $10 million. Political allies of Trump have also criticized Musk, with Senator Ted Cruz calling him “a liability to the administration’s agenda.” The ongoing saga has raised questions about Musk’s dual role as a corporate titan and political influencer.

What Lies Ahead?
The Musk-Trump saga shows no signs of cooling. Trump’s team is reportedly drafting policies to curb EV incentives further, while Musk is rallying support on X, where #SaveEV has trended with over 2 million posts. A potential government shutdown looms if the tax bill stalls, which could exacerbate market volatility. For now, Tesla investors and Musk’s 200 million X followers are bracing for more turbulence.

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