Tesla investors were rattled on Thursday by escalating tension between Elon Musk and President Trump, and the company’s stock plunged, wiping billions off the company’s market value.
Shares of Tesla fell 15 percent in afternoon trading after Mr. Musk, Tesla’s chief executive, ramped up his public criticism of the House Republican domestic policy bill, calling it an “abomination.” The move is set to wipe out more than $100 billion from Tesla’s roughly $1 trillion valuation.
A dispute over the policy bill spiraled in a matter of hours into a broader rupture in Mr. Musk’s relationship with the president, raising concern among investors about how the tensions might harm Mr. Musk’s businesses.
The spending bill would end a $7,500 tax credit from the federal government that has helped lower the cost of buying electric vehicles. Mr. Trump on Thursday said that Mr. Musk was upset about the electric vehicle tax credit repeal — a claim that Mr. Musk swiftly rejected.
The repeal would hurt Tesla, which is the largest seller of electric vehicles in the United States. It could amount to a $1.2 billion hit to Tesla’s annual profit, according to JPMorgan analysts. And ending the credits would come against a backdrop of falling Tesla sales as a result of consumer backlash to Mr. Musk’s role in the Trump administration, as well as the brand’s lack of new, more affordable models.
But repealing tax credits might not hit Tesla as hard as other automakers like General Motors and Ford Motor, both of which have invested heavily in factories and supply chains with the hope of eventually producing millions of electric vehicles a year. Tesla, unlike many of its competitors, might manage to lower prices to prop up demand if the credits end.
Danielle Kaye is a Times business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers.
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