Tesla stock price plunges as Trump suggests stripping Elon Musk's companies of federal contracts
Tesla shares plunged on Thursday as an increasingly bitter spat between CEO Elon Musk and President Trump erupted in public, with Mr. Trump suggesting the federal government could strip Musk's companies of their federal contracts.
Tesla's stock tumbled by as much as 18% in intraday trading — the electric car maker's sharpest selloff in almost five years — before regaining some ground to close down 14.3%, or $47.35. The drop wiped out about $151 billion in Tesla's market value.
The shares resumed their decline in after-hours trading.
The plunge comes as Mr. Trump and Musk, the world's richest person, traded barbs on social media on Thursday. Musk has ratcheted up his criticism of Mr. Trump's "big, beautiful bill" tax and spending bill this week, calling it "a disgusting abomination" on Tuesday as Congress pushes to send the legislation to the president by July 4.
Musk has denounced the bill for its price tag, with the nonpartisan Congressional Budget Office forecasting yesterday that the legislation would increase annual budget deficits by a total of $2.4 trillion over the next decade.
On Thursday, Mr. Trump criticized Musk on Truth Social, his social media app, suggesting that one way the government could cut spending is to withdraw government contract from Musk's companies.
"The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts. I was always surprised that Biden didn't do it!" Mr. Trump on Thursday afternoon.
Some of Musk's companies are reliant on federal contracts, including space exploration company SpaceX, which has received almost $20 billion in federal contracts since 2008, to USA Today.
The public dispute between the two "is sending shivers down the backs of Tesla investors," Wedbush tech analyst Dan Ives told CBS MoneyWatch.
"This has gone from a candlelight dinner bromance to a knife fight," Ives added. "Neither Musk nor Trump are one to back off."
Musk, meanwhile, also posted criticisms of Mr. Trump and Republican lawmakers on Thursday, pinning a post to his X timeline that asked, "Is it time to create a new political party in America that actually represents the 80% in the middle?"
Dragon spacecraft
The public feud between the two billionaires continued throughout much of the afternoon, with Musk taking aim at Mr. Trump's economic policies by predicting that the president's tariffs will "cause a recession in the second half of the year."
Musk, who has more than 220 million followers on X, in another post also invited people to respond to a question: "Is it time to create a new political party in America that actually represents the 80% in the middle?"
Mr. Trump, for his part, wrote on Truth Social that Musk "went CRAZY" over the tax bill's proposal to eliminate electric vehicle tax credits.
In response to the president's suggestion that the federal government strip Musk's company of its contracts, the Tesla CEO said he was ordering SpaceX to halt its Dragon spacecraft.
"In light of the President's statement about cancellation of my government contracts, will begin decommissioning its Dragon spacecraft immediately," Musk .
The spacecraft, which can carry both humans and cargo into space, has completed 51 missions, including 46 visits to the International Space Station, according to SpaceX. The Dragon returned two astronauts to Earth earlier this year after they had been on the ISS for almost 300 days, far longer than expected, after Boeing's Starliner craft encountered problems.
The bulk of SpaceX's tens of billions in federal grants over the last decade stem from the . NASA has to ferry astronauts and supplies to and from the International Space Station.
In a statement sent to CBS News, NASA said it will "continue to execute upon the President's vision for the future of space. We will continue to work with our industry partners to ensure the President's objectives in space are met."
Musk's electric car company receives than SpaceX, but it indirectly makes billions of dollars a year from various state and federal programs.
"The quickly deteriorating friendship and now 'major beef' between Musk and Trump is jaw-dropping and a shock to the market, and putting major fear for Tesla investors on what is ahead," Ives wrote in a note to investors.
