By BERNARD CONDON, Associated Press
Investors bought hundreds of billions of dollars of Tesla stock after Donald Trump was elected on a bet that politics were more important that profits.
In three hours Thursday, they learned yet again how dangerous that gamble could be.
Shares of Elon Musk’s electric vehicle maker plunged more than 14% in a stunning wipeout as investors dumped holdings amid a bitter war of words between the president and the world’s richest man. By the end of the trading day, $150 billion of Tesla’s value had been erased, more than what it would take to buy all the shares of Starbucks and hundreds of other big publicly traded U.S. companies.
The disagreement started over the president’s budget bill, then quickly turned nasty. After Musk said that Trump wouldn’t haven’t gotten elected without his help, Trump implied that he may turn the federal government against his companies, including Tesla and SpaceX.
“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,” Trump wrote on his social messaging service Truth Social. “I was always surprised that Biden didn’t do it!”
The drop on Thursday partially reversed a big runup in the eight weeks since Musk confirmed that Tesla would testing an autonomous, driverless “robotaxi” service in Austin, Texas, this month.
Investors fear Trump might not be in such a rush to usher in a future of self-driving cars in the U.S., and that could slam Tesla. So much of its real business selling electric cars is struggling now and so it needs the promise of a new age of driverless cars to be realized— and fast.
“The whole goal of robotaxis is to have them in 20 or 25 cities next year,” said Dan Ives, a Wedbush Securities analyst who is one of Tesla’s biggest fans, but is now worried. “If you start to heighten the regulatory environment, that could delay that path.”
He added, “There is a fear that Trump is not going to play Mr. Nice Guy.”
Trump’s threat to cut government contracts seems targeted more to another of Musk’s businesses, SpaceX, than his car company. The privately held rocket company has received billions of dollars for sending astronauts and cargo to the International Space Station, providing launches and doing other work for NASA. The company is currently racing to develop a mega rocket for the space agency to sent astronauts to moon next year.
A subsidiary of SpaceX, the satellite internet company Starlink, appears to also have benefited from Musk’s once-close relationship with the president.
On a trip with Trump to the Middle East last month, Musk announced that Saudi Arabia had approved his satellite service for aviation and maritime use. Though its not clear how much politics has played a role, a string of other recent deals for the company in Bangladesh, Pakistan, India and elsewhere has come as Trump has threatened tariffs and sent diplomats scrambling to please the president.
One measure of SpaceX’s success: A private financing round followed by a private sale of shares recently reportedly valued it at $350 billion, up from an estimated $210 billion just a year ago.
Now all that is in possibly in danger. Tesla shares got even a bigger lift from Musk’s close relationship with Trump, initially at least.
After the presidential election in November, investors rushed into the stock, adding more $450 billion to its value in just a few weeks. The belief was that the company would see big riches as Trump eased regulatory oversight of Tesla. They also were betting that the new administration would embrace Musk’s vision of a bright new future of millions of cars on U.S. roads without drivers behind the wheel and fleets of driverless taxis.
After hitting an all-time high on Dec. 17, the shares retreated as Musk’s time as head of a government cost-cutting group led to boycott and a big hit to Tesla’s reputation. They’ve recently popped higher again after Musk vowed to focus much more on Tesla and its upcoming launch of driverless taxis.
Now investors aren’t so sure, a worry that has translated into big paper losses in Tesla stock for Musk personally — down $20 billion for the day.
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