Tesla Stock Is Falling as Trump-Musk Feud Escalates. Where It Goes Next.

Elon Musk helped run the DOGE department until the end of May. Photo: Getty Images

Tesla stock tumbled in trading Tuesday after President Donald Trump suggested the Department of Government Efficiency, the government department tasked with rooting out inefficiency, review subsidies given to Elon Musk’s companies as the pair reignited their public feud.

The electric-vehicle maker’s shares fell 5.3% to $300.71 on Monday, after sliding 1.8% Monday, while the S&P 500 dropped 0.1% and Dow Jones Industrial Average rose 0.9%. It was the sixth consecutive drop for shares after an 8.2% jump on June 23, the day after the company launched a self-driving taxi service in Austin, Texas.

Another Trump-Musk feud was at the center of Tuesday’s trading. Musk ramped up his criticism of Trump’s tax and spending bill Monday, calling it “utterly insane and destructive.” He also promised to launch a new political party if the bill passed, adding that those in Congress who vote for it will lose their primary next year “if it’s the last thing I do on this Earth.”

The president hit back in a Truth Social post overnight, suggesting that DOGE—the department Musk helped run until the end of May—should look into his companies’ government subsidies.

“Elon may get more subsidy than any human being in history, by far,” he said in a post on Truth Social. “No more Rocket launches, Satellites, or Electric Car Production and our Country would save a FORTUNE,” he added. “Perhaps we should have DOGE take a good, hard, look at this?”

He said that without subsidies, “Elon would probably have to close up shop and head back home to South Africa,” in an apparent threat to the world’s richest person.

Tesla doesn’t receive direct subsidies from the Federal Government. Biden-era EV purchase tax credits worth up to $7,500 are available on any qualifying EV purchase. Those would be elminiated in Presidnt Trump’s “One Big Beautiful Bill.”

President Donald Trump has also eliminated a waiver giving California the ability to regulate its air emissions. California law is the basis for much of Tesla’s zero emission credit sales. California officials have said they would challenge the waiver’s removal in court.

As for SpaceX, it does a lot of business with the Federal Government, but it doesn’t receive much, if any, in the way of subsidies. SpaceX is the largest, lowest cost launch services provider by far. If the Federal Government didn’t use SpaceX, it would likely pay more to use another provider such as ULA, the Boeing and Lockheed Martin joint venture.

Tesla and SpaceX didn’t respond to a request for comment about the president’s comments. The White House didn’t immediately respond to a request for clarification about savings.

Trump added that Musk knew he was against the EV mandate long before the billionaire endorsed him for president. “Electric cars are fine, but not everyone should be forced to own one.”

Tesla investors ought to be at least a little concerned that things may get worse. The shares plunged more than 17% over June 4 and 5 when the Musk and Trump relationship spectacularly fell apart in an escalating war of words on social media. Shares didn’t eclipse the pre-feud levels until June 23, after Tesla launched its robo-taxi service in Austin, Texas, on June 22.

Wedbush analyst Dan Ives said their relationship had turned into a “soap opera that remains an overhang on Tesla’s stock,” in a note early Tuesday.

“We believe this situation will settle and at the end of the day Musk needs Trump and Trump needs Musk given the AI arms race going on between the U.S. and China,” he added, maintaining an Outperform rating on Tesla stock, and a $500 price target.

Write to Callum Keown at callum.keown@dowjones.com and Al Root at allen.root@dowjones.com