Tesla shares fall 7% after new dispute between Musk and Trump

NEW YORK, New York — Tesla shares fell 7% on Monday as the dispute between CEO Elon Musk and U.S. President Donald Trump reignited over the weekend.

Musk, a major Trump donor and ally, announced he was forming a third political party in protest of the Republican spending bill passed late last week. Musk has been highly critical of the bill, which he claims would kill jobs and hamper emerging industries.

For his part, Donald Trump said in a social media post on Sunday that the billionaire owner of SpaceX , Tesla and X had “gone off the rails” in recent weeks.

Investors fear that Musk's companies, which receive significant federal government subsidies, could suffer further if his dispute with Trump continues to escalate.

“With the autonomous future ahead and the AI ​​Revolution in full swing, Musk/Tesla have no need to continue baiting the bear as Trump may create more hurdles for Musk/Tesla/SpaceX in the coming years if this political battle gets nastier heading into the 2026 midterm elections,” Wedbush Securities analyst Dan Ives wrote in a note to clients late Sunday.

Tesla's stock has been extremely volatile since Musk went all-in on Trump in the run-up to last year's election, with the company facing a growing backlash as a result of Musk's embrace of right-wing policies and his role in the Trump administration.

Tesla's sales fell 13% in the first quarter, then repeated that performance in the second quarter, even as electric vehicle sales continued to rise for competitors, including the big Detroit automakers. Industry analysts believe much of that decline is due to discontent over Musk's affiliation with Trump and far-right parties like Germany's AfD.

Tesla also faces increasing competition globally, particularly from Chinese automakers such as BYD and Great Wall, which are rapidly expanding globally, offering relatively affordable electric vehicles with ultra-fast battery charging systems.

Since reaching an all-time high of $479.76 on December 17, Tesla shares have lost about 40% of their value. Tesla shares have fallen about $26 each since Thursday's close, at $289.75.

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