Tesla shares rebounded nearly 4% on June 6, recovering some losses after a sharp drop wiped out US$152 billion in market value.

The decline followed a public dispute between Tesla CEO Elon Musk and President Donald Trump over a proposed tax and spending bill.

Musk criticized Trump’s plan to eliminate the US$7,500 EV tax incentive by 2025, and Trump responded by suggesting he might cut federal contracts with Musk’s companies, including SpaceX.

Tesla shares have declined 26.9% this year, including a 14% drop on June 5.

.source-ref{font-size:0.85em;color:#666;display:block;margin-top:1em;}a.ask-tia-citation-link:hover{color:#11628d !important;background:#e9f6f5 !important;border-color:#11628d !important;text-decoration:none !important;}@media only screen and (min-width:768px){a.ask-tia-citation-link{font-size:11px !important;}}

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Tesla’s financial vulnerability to policy changes reveals strategic shift

Musk’s fierce opposition to losing the $7,500 EV tax credit marks a complete reversal from his previous stance that Tesla would benefit from its elimination 1.

This shift reflects Tesla’s deteriorating financial position, with the company reporting a 71% drop in net income in Q1 2025 and facing declining sales across key markets 1.

JPMorgan analysts estimate that losing the tax credit could cost Tesla approximately $1.2 billion annually, explaining Musk’s strong reaction to the proposed GOP bill 1.

The company has invested $240,000 in lobbying efforts in 2025 specifically to preserve the tax credit, demonstrating its growing dependence on government incentives 2.

Industry data shows that 50% of EVs are currently leased, with the tax credit significantly reducing monthly payments, making it crucial for maintaining consumer affordability in a market with intensifying competition 3.

2️⃣ Corporate brand damage from political activism shows measurable impact

Tesla’s once-loyal customer base has demonstrably eroded due to Musk’s political activities, with European sales falling by 45% in January 2025 according to market analysts 4.

The company’s stock has experienced extreme volatility, with a single day’s 14.3% drop following the Musk-Trump dispute wiping out approximately $151 billion in market value 5.

Public protests against Tesla have increased, with documented incidents of showroom demonstrations and customer testimonials expressing regret about their association with the brand 4.

Tesla’s traditional environmentally-conscious customer segments appear particularly alienated, with market data showing competitors gaining share in regions like California and Europe where Tesla previously dominated 6.

This demonstrates how intertwining corporate identity with polarizing political positions can create tangible business risks, especially for brands that previously attracted customers with specific value propositions.

3️⃣ Tesla’s regulatory dependencies heighten business volatility

Beyond the tax credit issue, Tesla faces multiple regulatory vulnerabilities that threaten its business model, including Trump’s proposed $250 annual EV owner fee that would offset gas tax revenue losses 7.

The U.S. Transportation Department’s authority over vehicle design standards directly impacts Tesla’s ability to produce steering wheel-free robotaxis, a cornerstone of Musk’s future vision for the company [Original article].

Trump’s announced 25% tariff on imported vehicles caused Tesla shares to decline nearly 6%, demonstrating how trade policy shifts can immediately impact investor confidence 8.

Tesla’s operations are deeply intertwined with government decisions, from SpaceX contracts to EV incentives, creating significant business uncertainty when political relationships deteriorate 5.

These challenges reflect the difficulties faced by companies operating at the intersection of emerging technologies and shifting regulatory frameworks, where policy changes can rapidly alter competitive positioning.

Recent Tesla developments

……