The month of June 2025 brought unprecedented unpredictability to Tesla’s stock, leaving even the most seasoned stock market analysts breathless. The company suffered a $150 billion drop in its market cap in just 48 hours, although it quickly recovered after a disagreement between Elon Musk and Donald Trump. Rumors and threats, along with a push for clarity, have filled investors and experts in the tech world with doubt about where Tesla will end up.

The Feud That Operated the Markets

The dispute arose when Elon Musk called a plan backed by Trump a despicable idea. As a response, Trump threatened Tesla with pulling its government grants and withdrawing any state incentives, since electric vehicles and autonomous driving depend heavily on these partnerships.

Things turned bad fast, with serious and harsh outcomes. Tesla’s stock suffered its second-biggest one-day drop on June 5 which erased $150 billion from the company’s market value. Not only did the rout take away almost all of Tesla’s gains made after the election, but it also negatively affected Wall Street indices, demonstrating how important Tesla is for the overall market. 

After investors panicked, Friday morning news stories reported that aides in the White House had organized a conference call between Musk and Trump. Just a report about a possible truce was enough to make Tesla shares go up as much as 5% in presale trading. Yet, the optimism didn’t last for long. Reports that the call was planned were quickly disputed by senior aides, especially Susie Wiles, who said Trump was not interested in a phone chat with Musk. Although there was no firm reconciliation yet, the market’s reaction to the lessening tensions suggested that Tesla’s value is easily swayed by political matters.

Alienation in Statistics

Thursday, June 5: Tesla stocks fell by 14% and lost a total of $150 billion in market value, its worst day since 2020. On June 6, shares increased by more than 5% in the morning and continued to hold gains during the afternoon. Meanwhile, the S&P 500 index gained 1% this Friday and crossed the 20% mark since early April, qualifying as a bull market.

Investors’ Anxiety and the Presence of Existing Regulations

The argument between Musk and Trump reveals how easily vulnerable Tesla can be to political shocks. Because federal subsidies and contracts are essential to Tesla’s business, Trump’s threat to take them away could be very damaging to the company. They say that this feud could lead to additional scrutiny by authorities, as the company’s semi-autonomous driving tech is already subject to examination by regulators. The events of this week make it hard for many to keep faith in Tesla’s future, says Stanley, pointing out that the rally was mainly driven by hopes for help from the Trump administration which hasn’t happened. Dan Ives, an analyst from Wedbush, explained that the feud between Musk and Trump is a setback for the market, indicating that while Tesla will continue to prosper in self-driving cars, government-related hurdles have become tougher since Trump was elected.

Several Musk businesses are involved in federal issues. SpaceX, Neuralink, The Boring Company, and xAI all have deals with government entities or depend on positive relations with regulators. Prolonged tension between Musk’s companies and the US government may result in wider consequences for Musk’s holdings. The episode shows how being a personality-focused company can lead to problems. Since Tesla is the only publicly traded business by Elon Musk, its fate relies heavily on his public persona and connections in politics. Investors are finding that a tweet from a CEO or an offhand comment can change a company’s market value by billions at the speed of an overnight tweet.

What Will Happen to Tesla and Its Investors Moving Forward

Even with Friday’s upturn, Tesla’s long-term prospects are not clear. It appears that the White House is not expecting a truce and Trump is as aggressive as ever. While Musk has suggested he would tone down his comments, it will probably take time for confidence in Tesla to return. Those following the market are currently thinking about several main questions. Will the conflict continue to worsen or start to fade away? Because neither side is willing to budge, more highs and lows can be expected. Can federal contracts be taken away by the government? This threat is real and any response could ruin Tesla’s finances. How are government rules around business likely to shift? Because issues with Tesla’s autonomous tech have been discussed already, greater scrutiny could make it harder for the company to develop and succeed. Could Tesla rebuild trust among its investors? Long-term success for the company relies on being able to handle the challenges of Washington politics.

Tesla’s experience over the past two days clearly shows that political challenges in the market can be as powerful as technological ones. The message for investors: When a major dispute between countries hits the top automaker, your money can change hands in a moment. As the smoke clears, most attention will be focused on Musk, Trump, and how business and politics are constantly connected.