01.07.2025 14:14

Tesla's stock experienced a significant downturn, plummeting approximately 5% in pre-market trading. This sharp decline followed a public spat between Elon Musk and Donald Trump, escalating tensions over proposed legislation. Musk's vocal opposition to Trump's "big, beautiful bill" ignited the conflict, culminating in Musk's threat to establish a new political party to counter the bill's proponents should it pass.

Trump's response was swift and pointed. He questioned the necessity of widespread electric vehicle adoption, arguing against mandated ownership. Furthermore, he highlighted the substantial government subsidies received by Musk, suggesting that their removal could cripple Musk's various ventures, including SpaceX and Tesla, potentially forcing a return to South Africa. Trump even alluded to the possibility of examining the cryptocurrency Dogecoin in relation to the potential cost savings resulting from subsidy cuts.

Undeterred by Trump's threats, Musk openly challenged the president to implement the subsidy cuts. The escalating rhetoric led to speculation about further repercussions, including the possibility of more significant actions against Musk beyond subsidy reductions. The potential for more drastic measures fueled market anxieties, contributing to the Tesla share price drop.

Meanwhile, the likelihood of Musk forming a political party named "America's Party" surged, reaching a 40% probability on the prediction market Kalshi. This dramatic increase reflects the growing perception that the conflict between Musk and Trump could significantly impact the political landscape. The escalating situation underscores the intertwining of business, politics, and market volatility in the modern era.