Tesla already had big problems. Then Musk went to battle with Trump

Tesla After a disastrous first quarter, we face major challenges as we try to get back on track. These headwinds have been heavily strengthened this week.

CEO Elon Musk officially signed a term with the Trump administration at the end of May, hitting the 130-day mark. On his way out the door, Musk expressed sharp criticism of Trump’s signature. The expenditure bill is being discussed in Parliament as it is expected to have an impact on national debt.

What began as policy disagreements quickly escalated into an all-out online brawl as Musk and President Donald Trump cast insults from their respective social media platforms. After Musk called “one, a big beautiful bill” “hate” and gathered his followers on X to “kill the bill,” Trump said Musk threatened to be “crazy” and blocked off the subsidies for Musk’s corporate. Musk replied, “Go ahead and make my day.”

Rift plunged 14% on Thursday, wiping out its value of around $152 billion. Musk is still the richest person in the world on paper, but his net worth has plummeted at $34 billion Bloomberg’s Billionaire Index.

More importantly, Spat has resulted in a disruption in relationships that fused business, politics and power in a virtually unprecedented way in American history. The impact on Tesla, which fell from the $1 trillion club on Thursday, could be serious, not just because Trump reportedly is considering selling or distributing red models he bought in March. Tesla showroom.

A senior White House official told NBC News on Friday that the president was “not interested” in calling masks to resolve their feud.

The outrage from the Trump administration could affect everything, from future regulations, investigations and government support for Tesla to decisions about tariff exemptions the company is seeking to purchase Chinese-made manufacturing equipment.

Tesla’s stocks hadn’t performed badly over the wider market before the Musk and Trump split. A combination of increasing competition with low-cost EV makers in China and consumer rebound against Trump’s political activity and rhetoric led to a 20% drop in automobile revenue, slipping 9% in the first quarter of the previous year.

It’s not certain Tesla shareholders were hoping for when they rose about 30% in the days after Trump’s election victory in November. After spending nearly $300 million to bring Trump back to the White House, Musk has played a major role in the administration and is poised to drive regulatory change in ways that would benefit his businesses.

Instead, his company is suffering and Mask’s actions are primarily responsible.

One of his most divisive actions, leading the Trump administration’s government efficiency (DOGE), was the dismantling of USAID, which previously delivered billions of dollars. Food and medicine In more than 100 countries.

Beyond the US, Musk supported the German far-right militant Afd, giving him a gesture that was considered a Nazi salute at the inauguration rally.

This has resulted in many cases of vandalism and arson at Tesla facilities and vehicles in the last few months, as well as a wave of peaceful protests at Tesla stores and service centers in North America and Europe.

The Musk protest ads appeared at Times Square in New York and London’s Bus Shelters, urging people to boycott Tesla, with some labeling the company’s EVs as “Swastistars.” Vancouver’s international automatic show Tesla has been deleted It will cause safety issues from a list of exhibitors who are afraid of the company’s existence.

Additionally, President Trump’s drastic tariffs led to concerns that the costs of parts and materials essential to EV production would increase. In its first quarter revenue report in April, Tesla said it would “revisit the 2025 guidance with the Q2 update,” following the growth of its promise this year.

Pension funds investing in Tesla are calling the company’s “crisis” Leaders should work at least 40 hours a week to focus on solving the problem.

Public servants reflect that sentiment and are calling on Tesla’s board to take action.

New York City Director Brad Lander said in a statement Thursday to CNBC that the “schoolyard battle” between Trump and Musk “emphasizes whether Tesla’s weak accountability measures and poor governance threaten not only the company’s financial stability and shareholder value, but also the future of at-home versions of EV production.

Maryland Secretary Brook Lehman told CNBC that its board of directors “is not working to ensure that Tesla has a CEO, which places the company’s interests first.”

She added that Musk’s name is synonymous with Tesla, so the board needs to ensure that Tesla can stand on its own, regardless of who is leading the company.

“Musk’s actions continue to threaten Tesla’s future,” Lehman said. “As long as Tesla is identified as Elon Musk and he continues to be a polarizing figure, he will continue to undermine the brand, a big part of Tesla’s value.”

Mask did not respond to requests for comment. CNBC also reached out to Robin Denholm, the chairman of the government relations and the CEO’s office, as well as directors and executives, for comment. None of them responded at the time of publication.

Tesla investors focus on the fundamentals of their business and are justified by skepticism.

The company has not been able to deploy new, innovative, affordable model EVs, but Chinese competitors like BYD are flooded with markets, especially in Europe.

Goldman Sachs analysts lowered Tesla’s price target on Thursday. Deliveries for this quarter track US tracking, primarily due to the 2025 outlook. China’s sales from these two months fell approximately 20% from the previous year.

Quality is also a problem. Tesla announced eight voluntary recalls of CyberTruck in 15 months due to a variety of issues, including software bugs and stick accelerator pedals.

Musk is urging investors to largely ignore their core business and look to the future. He says it’s about self-driving cars and humanoid robots.

But even there, Tesla is behind him. At AVS, the company gave up the ground alphabet Waymo operates commercial Robotaki services in several US markets. After missing the 10-year deadline, Musk has promised to launch a small amount of Tesla Driverless Ride Hale Service in Austin this month.

The Austin Robotaxy Service will operate in the Geofykens area, Musk said in a recent interview with CNBC’s David Faber, starting with a small fleet of just 10-20 Model Y vehicles with full self-drive (FSD) non-surveillance technology. If everything goes well, Musk said Tesla will quickly expand its unmanned product to other markets such as San Francisco and Los Angeles.

What consumers can’t see right away are the Cybercab and Robvan vehicles that Tesla promoted at the “We, Robot” event at last year’s “We, Robot” event to boost customer and investor enthusiasm.

On Friday, Milano Cobac, Tesla’s vice president of Optimus Robotics, announced that he would be leaving after joining the company in 2016. Musk thanked him. ”Remarkable contributions“In a post from X.

Still, there are plenty of Teslables and Musk fans who believe in the CEO’s vision. The 4% rebound of the stock on Friday is a sign that some have seen the opportunity to buy dip.

“I think the real story here is the foundation of Tesla investors,” Josh Brown, CEO of Ritholtz Wealth Management and CNBC Pro, said on Friday CNBC’s “Halftime Report.” “This isn’t a stock yet.”

Fundstrat’s Tom Lee said the Tesla sale was “overdone.”

Tesla’s market capitalization, which has been dramatically expanding compared to all other US automakers, is built on Mask’s vision of Tesla’s Optimus Humanoid robots working in the factory and babysitting children.

Morgan Stanley’s Adam Jonas wrote in a memo this week that he pointed out that “Tesla still has so many valuable cards that are primarily non-political,” and that he pointed out the company’s “AI leadership, autonomous/robotics, manufacturing, supply chain reorganization, renewable power, renewable power.” [and] Critical infrastructure. ”

From a Tesla’s existing business perspective, the most pressing impact from what’s going on in Washington, D.C. is the rollback of the EV credits of the current budget bill, which Musk is loudly opposed, which has struggled to find enough support in the Senate. There is also the issue of customs and whether Tesla can receive priority treatment. This is an increasingly unlikely proposal to be Musk Trump’s fallout.

Matthew Labro, a former Tesla Staff Program Manager, told CNBC he was not surprised that Musk had blown up relations with the president. Labrot ended earlier this year after sending Open Letter It protests against masks’ divisive political activities.

“I’m devastated by the country and the climate, but Elon just blames himself,” Lovelot said in an interview. “Bring the loose Canon back and expect a stray Canon fire.”

Tesla investors are currently unable to know how much of Musk’s energy and time is responsible for his only public company and the majority of his wealth. Even without politics, he is still among other businesses, including SpaceX, AI startup Xai, and Brain Tech startup Neuralink.

As of Thursday, the masks still had Westwing offices that had not yet been cleaned, the two executives told NBC News. One authorities said the space is likely to be packed in the coming days.

And while his time at Trump Camp may have ended, Musk called on his followers to form a new party in the US

“Is it time to actually create a new political party in America that represents 80% of the central one?” he wrote on X on Thursday. I wrote this in a post pinned at the top of his page. According to the post, 80% of the 5.6 million respondents to the unofficial poll said yes.

Musk’s actions this week may have caused a lasting rift with the president. But one thing is clear. His company cannot escape from the White House.

clock: The impact of Musk’s feud with Trump