Tesla stock drops on Musk’s latest battle with Trump, loss of EV and regulatory credits

Tesla (TSLA) stock is sliding on Monday after CEO Elon Musk’s latest foray into politics once again challenges President Trump. Separately, Wall Street is growing concerned over the loss of EV tax credits and regulatory credits stemming from Trump’s “One Big Beautiful Bill.”

Over the weekend, Musk polled users on X about whether he should start an independent party called the American Party to challenge the government’s status quo. Musk continued his complaints that Trump’s bill would do nothing to rein in the deficit and offers little in terms of benefits to the American people.

“By a factor of 2 to 1, you want a new political party and you shall have it!” Musk said. “Today, the America Party is formed to give you back your freedom.”

Tesla stock slipped over 6% in early trade following the move.

Trump and Musk supporters hoped a recent detente would settle the matter, but it erupted again with Musk’s latest foray.

“I am saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks,” Trump responded in a Truth Social post. “He even wants to start a Third Political Party, despite the fact that they have never succeeded in the United States – The System seems not designed for them.”

Musk’s past strong critiques of the bill led to a massive falling out with Trump, with Tesla and Musk’s other businesses like SpaceX caught in the crosshairs.

The battle between the two was too much for even Tesla bulls and investors to bear, who saw the stock pummelled a few weeks back before recovering.

“Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take,” Wedbush analyst Dan Ives wrote. “After leaving the Trump Administration and DOGE there was initial relief from Tesla shareholders and big supporters … That relief lasted a very short time and now has taken a turn for the worst with this latest announcement.”

As if the political battles weren’t enough, Trump also responded to a feature of the bill Musk privately groused over.

“It is a Great Bill but, unfortunately for Elon, it eliminates the ridiculous Electric Vehicle (EV) Mandate, which would have forced everyone to buy an Electric Car in a short period of time,” Trump said on Truth Social. “I have been strongly opposed to that from the very beginning.”

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