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President Donald Trump's public criticism of Tesla (TSLA) CEO Elon Musk, in response to Musk’s threat to unseat legislators supporting Trump's spending bill, is significantly pressuring TSLA's stock. Trump highlighted the substantial subsidies Musk’s companies, including TSLA, receive, suggesting that the Department of Government Efficiency (DOGE), co-led by Musk, should scrutinize these benefits. This high-profile feud introduces political risk, raising concerns among investors about potential regulatory retaliation, such as the elimination of EV tax credits, which could erode TSLA’s competitive pricing advantage.

• The personal nature of the conflict, amplified by Trump's comments implying TSLA’s reliance on subsidies for survival, has sparked fears of broader policy shifts targeting Musk’s business empire. This political uncertainty undermines investor confidence, particularly given TSLA’s high valuation. Shares of TSLA are currently trading with a forward P/E north of 160x.
• Compounding this pressure, JPMorgan issued a cautious note yesterday, reiterating an Underweight rating on TSLA with a $115 price target, citing a likely delivery shortfall for Q2. The firm’s checks indicate that the softer demand observed in 1Q25, where TSLA delivered only 336,681 vehicles -- its worst performance since 2Q22 -- has persisted into 2Q25.
• Key factors dampening demand include Musk’s polarizing political involvement, particularly his role in DOGE and his support for right-wing policies, which have fueled consumer backlash and boycotts, notably in Europe and key U.S. markets like California. Additionally, TSLA faces intensified competition from rivals like BYD (BYDDY) in China and a broader slowdown in EV demand as consumers await a refreshed Model Y and an affordable next-generation vehicle, both delayed from earlier timelines.
• The combination of these negative developments has halted TSLA’s recent stock rally, which was driven by enthusiasm surrounding the June 22, 2025, Robotaxi launch in Austin, Texas. The robotaxi program, initially seen as a transformative growth driver, has faced some scrutiny due to early reports of erratic vehicle behavior, such as phantom braking and traffic violations, attracting attention from the National Highway Traffic Safety Administration.
• Still, investor optimism about TSLA’s AI and autonomous driving prospects had pushed the stock up by about 58% from its April lows through late June, but the Musk-Trump feud and delivery concerns are erasing some of these gains.

The tables have turned since the November 2024 election when Musk’s close alliance with Trump fueled a 169% surge in TSLA’s stock through mid-December. The souring relationship now poses a significant overhang, amplifying risks of subsidy cuts and regulatory scrutiny, while TSLA grapples with reigniting growth through new vehicle launches and robotaxi expansion amidst weakening demand and competitive pressures.