Musk may cut Trump funding: will political fallout reshape Tesla’s future?

Elon Musk's escalating conflict with former President Donald Trump has sent shockwaves through Tesla's stock and investor confidence. After Musk publicly criticized Trump on social media, Trump retaliated by threatening to cut government contracts worth an estimated $38 billion, causing Tesla shares to plunge over 14% in a single day, erasing roughly $150 billion in market value.

This political fallout comes amid broader tensions, including Musk's withdrawal of promised funding to Republican-associated structures and his call for a new political party representing the majority middle class. The dispute has also impacted crypto markets, with Bitcoin dipping below $101,000 and Ethereum falling 6%, reflecting shaken investor sentiment.

Tesla's challenges are compounded by ongoing grassroots protests (#TeslaTakedown) and supply chain risks, notably China's dominance in strategic resources critical to the EV industry. Analysts warn that Tesla remains a high-risk stock due to volatility and political entanglements.

Wedbush Securities analyst Dan Ives said, "I believe 90% of the future value of Tesla is going to be autonomous and robotics," highlighting the company's long-term potential despite current turmoil.

Despite the sharp sell-off, Tesla shares rebounded by nearly 5% the following day, reflecting some recovery amid a broader positive market environment. However, the ongoing Musk-Trump feud underscores the precarious intersection of politics and business that could reshape Tesla's future.

Paul Stanley of Granite Bay Wealth Management noted, "Ongoing controversy could affect investor confidence and market stability," emphasizing the risks ahead.

As Musk navigates this volatile landscape, the outcome of his political and business decisions will be critical for Tesla's trajectory and investor trust.

Elon Musk's public feud with former President Donald Trump, including threats from Trump to cut $38 billion in government contracts, has triggered a 14% plunge in Tesla shares and raised questions about the future of Musk's funding and Tesla's market stability amid political fallout.