Breakdown of Trump-Musk Relationship and Tesla Stock Crash: A Comprehensive Analysis
On June 5, 2025, the once-powerful alliance between Donald Trump and Elon Musk collapsed in a very public fallout, sending shockwaves through global financial markets. Once hailed as a strategic partnership between the world’s most powerful leader and wealthiest entrepreneur, their confrontation culminated in a 14.26% plunge in Tesla's stock price—wiping out approximately $152 billion in market capitalization. This fallout is far more than personal—it signals potential upheaval across American politics and the broader economic landscape.
📉 Political-Industrial Bromance in Ruins
🤝 The Beginning of an Alliance
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In the 2024 presidential election, Elon Musk donated approximately $288 million to Trump’s reelection campaign, playing the role of a political “kingmaker.”
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After winning, Trump appointed Musk as head of the newly created Department of Government Efficiency (DOGE), granting him vast powers over budget restructuring.
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Musk used this platform to advance favorable policies for his companies—Tesla, SpaceX, and Starlink—consolidating his political influence.
💥 The First Cracks: Clashing Interests
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Musk abruptly resigned from his DOGE position in May 2025, having failed to meet federal spending cut targets.
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Tensions escalated after Trump rejected Musk’s pick for NASA director, Jared Isaacman.
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Federal contracts for SpaceX were also canceled over ethical concerns, further fraying their relationship.
🏛 Head-on Collision Over the “BBB” Tax Bill
🧾 Musk’s Fierce Criticism
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Trump’s sweeping tax bill, dubbed “BBB (The One Big Beautiful Bill),” was publicly condemned by Musk.
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He labeled it “ridiculous, disgusting, and revolting,” warning it would increase the federal deficit by $2.5 trillion and lead the U.S. toward bankruptcy.
⚖️ Trump’s Counterattack
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During a summit with German Chancellor Friedrich Merz, Trump expressed “deep disappointment” with Musk, publicly ending their alliance.
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He argued that Musk’s attacks stemmed from frustration over reduced EV subsidies, his failed NASA nomination, and DOGE resignation.
📱 Escalation on Social Media
💬 Musk Strikes Back
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Musk claimed on X, “Trump wouldn’t have won without me,” accusing him of betrayal.
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He reposted a conservative pundit’s call for Trump’s impeachment, commenting “Yes.”
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Most explosively, Musk alleged Trump was named in the ‘Epstein files’, suggesting this was why the files remained sealed.
💣 Trump Responds
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Trump lashed out on Truth Social, calling Musk “insane” and suffering from “Trump Derangement Syndrome.”
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He hinted at canceling federal contracts with Musk’s firms, prompting Musk to announce SpaceX would begin withdrawing its Dragon capsule from NASA operations.
📉 Impact on Tesla’s Stock
| Item | Value/Description |
|---|---|
| 📉 Daily Drop | -14.26% |
| 💸 Market Cap Loss | ~$152 billion |
| 🪙 Closing Price | $284.70 |
| 📉 Significance | Largest drop in nearly 5 years |
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The fallout rattled Wall Street. The Dow Jones, S&P 500, and Nasdaq all closed lower on June 5.
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Tech stocks, including Apple, Nvidia, and Palantir, also suffered due to heightened market anxiety.
🔍 Market Interpretation: “Loss of Corruption Premium”
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Analysts emphasized the drop was not related to Tesla’s business fundamentals.
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Electrek stated, “Corruption was priced into Tesla stock,” noting the market previously priced in government favoritism under Trump.
📊 Long-Term Fallout and Outlook
🗳 Political Implications
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Musk launched a poll on X asking if it was time to form a new centrist party, suggesting possible third-party ambitions.
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Trump’s hold over the GOP may weaken, while Democrats may benefit from the conservative civil war.
💼 Economic Consequences
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Federal contract uncertainty could extend to other firms tied to political favoritism.
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Musk’s companies—Tesla, SpaceX, Starlink, Neuralink—face possible regulatory and fiscal hurdles under Trump’s second term.
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Meanwhile, Musk’s political independence could reshape American politics in unexpected ways.
🧾 Sources
[1] https://www.newsis.com/view/NISX20250606_0003203699
[2] https://www.donga.com/news/Inter/article/all/20250606/131756098/1
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[5] https://zdnet.co.kr/view/?no=20241109073129
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[7] https://www.mk.co.kr/economy/view/2025/404795
[8] https://www.hani.co.kr/arti/international/america/1201441.html
[9] https://www.chosun.com/international/international_general/2025/06/05/QX3ZVEEEFBDDJHSGP3RS7Q5ENU/
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[13] https://v.daum.net/v/20250606061645000
[15] https://electrek.co/2025/06/05/tsla-drops-14-as-investors-see-corruption-being-priced-out-of-tesla-stock/
[16] https://www.khan.co.kr/article/202506061010001
[19] https://www.mk.co.kr/news/world/11335982
