Tesla's volatile week has Wall Street on edge.
After a war of words erupted between CEO Elon Musk and former President Donald Trump, the electric car maker’s stock took a historic plunge—erasing more than $150 billion in value in just one day. The fallout arrives at a crucial moment: Tesla is poised to launch its long-awaited robotaxi service in Austin, Texas. Whether the company regains its footing—or continues its downward spiral—may depend as much on Musk’s ability to navigate political landmines as on his technological ambitions.
Elon Musk’s Political Firestorm Puts Tesla in the Crosshairs
The rift between Musk and Trump has rapidly evolved from a skirmish into a full-blown liability. On Tuesday, Musk publicly criticized Trump’s “One Big Beautiful Bill,” calling it fiscally irresponsible. Trump hit back, threatening to strip federal contracts from Musk’s companies, including Tesla and SpaceX.
Musk escalated matters further, implying Trump appeared in unreleased Jeffrey Epstein files and briefly threatened to shut down the Dragon spacecraft program, a key link in NASA’s space infrastructure. Though he later backtracked, the damage was done. Tesla shares nosedived 14.3% on Thursday, the worst single-day loss in the company’s history—vaporizing more than $150 billion in market value. Shares rebounded 3.7% Friday but remain down nearly 25% year-to-date.
Cathie Wood, CEO of ARK Investment Management and a long-time Tesla backer, sees the episode as a sign Musk is trying to untangle Tesla from government entanglements. But the risk is clear: SpaceX holds roughly $22 billion in U.S. government contracts, and Tesla’s future robo-taxi network, still awaiting regulatory greenlights, may now face political headwinds.
The rift between Musk and Trump has rapidly evolved from a skirmish into a full-blown liability. On Tuesday, Musk publicly criticized Trump’s “One Big Beautiful Bill,” calling it fiscally irresponsible. Trump hit back, threatening to strip federal contracts from Musk’s companies, including Tesla and SpaceX.
Musk escalated matters further, implying Trump appeared in unreleased Jeffrey Epstein files and briefly threatened to shut down the Dragon spacecraft program, a key link in NASA’s space infrastructure. Though he later backtracked, the damage was done. Tesla shares nosedived 14.3% on Thursday, the worst single-day loss in the company’s history—vaporizing more than $150 billion in market value. Shares rebounded 3.7% Friday but remain down nearly 25% year-to-date.
Cathie Wood, CEO of ARK Investment Management and a long-time Tesla backer, sees the episode as a sign Musk is trying to untangle Tesla from government entanglements. But the risk is clear: SpaceX holds roughly $22 billion in U.S. government contracts, and Tesla’s future robo-taxi network, still awaiting regulatory greenlights, may now face political headwinds.
Robotaxi Rollout Could Be Tesla’s Next Big Lift—If It Lands
Amid the chaos, Tesla is pushing ahead with what may be its most ambitious move yet: launching a fleet of fully autonomous robotaxis. A Bloomberg report pegs the launch date at June 12, though the company has not confirmed. If successful, it could reframe Tesla as a leader in next-generation urban mobility and help reverse the stock’s downward trajectory.
Musk told CNBC the rollout will begin with 10 self-driving Model Y vehicles in Austin, with expansion plans tied to performance and regulatory approval. Eventually, Tesla owners may be able to add their own vehicles to the network, a decentralized model that could scale the service rapidly ahead of the Cybercab launch expected next year.
Analysts are split. Wedbush’s Dan Ives sees the technology as a potential trillion-dollar opportunity. Oppenheimer analysts caution that more hardware and software iterations may be needed before true autonomy is achieved. Tesla’s camera-only Full Self-Driving system remains a lightning rod in the industry, with some skeptical it can reach reliability levels without lidar or radar assistance.
Despite the uncertainty, Tesla bulls remain undeterred. The stock closed just above $295 Friday—still 40% below its December peak, but above its recent lows. Cathie Wood sees a path to $2,600 by 2029, nearly nine times the current price.
The Premium on Musk: Can Tesla Hold Its Value Amid Chaos?
The political crisis has reignited questions about Musk’s role—and whether his unpredictability is an asset or a liability. Tesla’s fundamentals tell a complicated story: the company made little profit last quarter from selling vehicles or batteries, relying instead on regulatory credits. Over the last year, its core auto and energy business generated just $3.5 billion in earnings, down from $12 billion in 2022.
Yet the market continues to place an extraordinary premium on Tesla—valuing it at around $960 billion. By some estimates, its “true” valuation based on automotive fundamentals could be closer to $100 billion. That $800 billion gap is built on faith in Musk’s vision.
Even as critics argue he’s stretched too thin—juggling Tesla, SpaceX, Neuralink, and his social media platform X—supporters insist there is no alternative. “Tesla without Musk would be a disaster,” says Gary Black of the Future Fund. Dan Ives agrees: “He is the visionary and architect behind autonomous vehicles and humanoid robots.”
Still, Musk’s grip is not unchallenged. A Delaware court recently voided a $56 billion compensation package that accounts for two-thirds of Musk’s Tesla holdings. If the decision is upheld, it could force Tesla’s board to seek shareholder approval to reinstate it—an uncertain prospect amid the current turbulence.
Conclusion
Tesla is entering one of the most consequential weeks in its history, with the robotaxi launch potentially redefining its business model—while political fallout threatens to destabilize it. Investors are watching closely, weighing near-term volatility against long-term vision. As always, Tesla’s future is inseparable from Elon Musk himself: admired, unpredictable, and—for better or worse—indispensable.