Tesla shares clawed back from steep losses after Trump-Musk war of words

A war of words is beginning to emerge between U.S. President Trump and Elon Musk following the billionaire's White House exit. Joy Malbon has the details.

Tesla shares clawed back from steep losses as a war of words between CEO Elon Musk and U.S. President Donald Trump appeared to cool, easing investor worries about the likely political fallout on the electric automaker.

Shares rose about five per cent in early trading. Politico had reported Musk and Trump were expected to speak on Friday, but a White House official told Reuters there were no plans for a call.

Musk signalled on his X social media platform he was open to easing tensions with Trump, agreeing with comments from hedge fund manager Bill Ackman calling for a detente.

The spat between the world’s most powerful man and its richest erased more than US$150 billion from Tesla’s market value on Thursday, the company’s biggest drop in one session.

Short-sellers, or investors betting against the stock, pocketed nearly $4 billion from the drop, the second-biggest single-day of profit on record, according to data from Ortex.

Tensions escalated after Musk stepped up criticism of Trump’s sweeping tax and spending bill, which proposes largely ending the popular $7,500 EV tax incentive by the end of 2025.

In response, Trump suggested cuts to the government’s contracts with Musk’s companies, including rocket maker SpaceX.

“It might be a bit too hopeful to think their relationship will ever go back to what it once was, but if cooler heads prevail and the tension eases, that would definitely be a big improvement for Tesla,” said Tesla shareholder Matthew Britzman, who is an analyst at Hargreaves Lansdown.

Lofty stock valuation

An open clash with Trump could pose multiple hurdles for Tesla and the rest of Musk’s sprawling business empire.

The U.S. Transportation Department regulates vehicle design standards and would have a big say in whether Tesla can mass-produce robotaxis without pedals and steering wheels.

Tesla did not immediately respond to a request for comment on the call.

Tesla stock is down 29.5 per cent this year after a 14 per cent drop on Thursday. Still, the shares trade at 120 times expected earnings, a lofty multiple compared to other automakers and even tech giants such as Nvidia.

The shares have been on a turbulent ride since last July when Musk backed Trump’s White House bid. They surged initially as investors bet on less regulatory pressure for robotaxis, but tumbled due to soft sales and brand fallout from Musk’s political stance.

Some analysts said the rift was likely to blow over as it would be detrimental to both the president and his biggest backer.

“Those are obviously threats that are unlikely to come into fruition,” said City Index analyst Fiona Cincotta. “I don’t expect this to blow out into anything more serious than a war of words for a couple of days.”

(Reporting by Akash Sriram and Shashwat Chauhan in Bengaluru, Amanda Cooper and Samuel Indyk in London; Additional reporting by Purvi Agarwal; Editing by Sherry Jacob-Phillips, Tomasz Janowski and Arun Koyyur)