Tesla stock plunges 14%, after Trump threatens to cut Musk’s federal contracts

Tesla (TSLA) shares suffered a dramatic drop on June 5, plunging 14.26% amid an intensifying public feud between CEO Elon Musk and President Donald Trump. The sharp decline marked Tesla’s worst trading day since March and its second-largest single-day loss since September 2020, erasing over $150 billion in market capitalization — the  largest one-day loss in the company’s history.

The market rout followed a series of increasingly hostile exchanges between Musk and Trump, sparked by the president’s threat to slash federal subsidies and contracts tied to Musk’s companies, Caliber.Az reports via foreign media. 

“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts," Trump wrote on Truth Social. "I was always surprised that Biden didn't do it!"

Musk, whose other ventures — including SpaceX and xAI — rely heavily on government funding, responded by threatening to decommission SpaceX’s Dragon spacecraft. He also criticised Trump’s latest tax legislation, urging his followers to oppose what he called a “disgusting abomination” and “bankrupting America.”

The stock plunge came after Trump publicly expressed disappointment with Musk during an Oval Office press conference, accusing him of turning against the administration over disagreements about a proposed cut to the electric vehicle (EV) mandate. Musk, who had previously played a key advisory role in Trump’s Department of Government Efficiency (DOGE), formally exited his position last month.

Musk’s public break from Trump and mounting political friction are raising concerns over Tesla’s access to federal support at a critical time for the EV industry.

By Sabina Mammadli