Tesla share price swings dramatically after Elon Musk’s bold act

The stock market has reacted in swift and stunning fashion to the fallout of Tesla CEO Elon Musk’s relationship with Donald Trump.

Donald Trump and Elon Musk’s unlikely bromance imploded in spectacular fashion Thursday as the US president and his billionaire former aide tore into each other in a very public, real-time divorce.

And the biggest loser might have been Tesla share holders.

Trump said in a televised Oval Office diatribe that he was “very disappointed” with criticisms from his top donor of a “big, beautiful” spending bill before Congress, before threatening to tear up the tycoon’s multibillion-dollar US government contracts.

The South African-born Musk hit back live, saying that the Republican would not have won the 2024 election without him and slamming Trump on his X social media platform for “ingratitude.” As the spat got increasingly bitter, Musk also posted that Trump “is in the Epstein files,” referring to US government documents on disgraced financier Jeffrey Epstein, who committed suicide in jail while awaiting trial for sex crimes.

Shares in Musk’s Tesla electric vehicle manufacturer plummeted about 15 per cent as the astonishing row escalated — wiping off more than $100 billion of the company’s value.

They are down almost 20 per cent over the past five days.

Questions had long swirled about how long the extraordinary alliance could last between the world’s richest person and the most powerful.

The world got the answer from Trump in a 10-minute rant after he was asked about Musk calling his tax and spending mega-bill a “disgusting abomination”.

“I’m very disappointed in Elon. I’ve helped Elon a lot,” Trump told reporters in the Oval Office, as visiting German Chancellor Friedrich Merz looked on.

“Look, Elon and I had a great relationship. I don’t know if we will anymore.”

Trump said he had asked “crazy” Musk to leave his administration and also threatened to take away the tech tycoon’s government contracts.

Back in happier times when Donald Trump was helping Elon Musk sell Teslas. (Photo by Mandel NGAN / AFP)

His comments came less than a week since Trump held a grand Oval Office farewell for Musk as he wrapped up his time leading the cost-cutting Department of Government Efficiency (DOGE).

A wistful-sounding Trump took reporters through the break-up with Musk on live television Thursday, in what at times sounded more like a therapy session than a meeting with a foreign leader.

The Republican suggested that Musk had “Trump derangement system,” missed working at the White House and had become “hostile” after his departure.

Tesla and Space X boss Musk, who has criticised Trump’s bill on the grounds that it would raise the US deficit, hit back in a series of rapid-fire social media posts.

He branded Trump’s claims “false” before doubling down on the sensitive issue of Trump’s election win. Musk was the biggest donor to Trump’s 2024 campaign, to the tune of $300 million.

“Without me, Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate,” said Musk. “Such ingratitude.”

Musk then posted a poll on whether he should form a new political party - a possible threat to Republican support, even if the foreign-born tycoon himself is barred from becoming president under the US Constitution.

The bromance is over. (Photo by Mandel NGAN / AFP)

As the row moved to social media, Trump doubled down by threatening Musk’s massive government contracts, including for launching rockets and for the use of the Starlink satellite service.

US media have put the value of the contracts at $18 billion. “Elon was ‘wearing thin,’ I asked him to leave,” Trump said on his Truth Social platform, adding that Musk had gone “crazy” about a plan to end electric vehicle subsidies in the spending bill.

He then dropped the bombshell: “The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts.” Trump’s decision to tap Musk to head DOGE was one of the most controversial of his second presidency. Musk’s young “tech bros” cut tens of thousands of government jobs and slashed US foreign aid.

Trump and Musk’s whirlwind relationship initially blossomed, with the tech tycoon appearing in the Oval Office with his young son on his shoulders, flying with Trump aboard Air Force One and staying at the White House and Trump’s Mar-a-Lago resort.

But the 53-year-old lasted just four months on the job, becoming increasingly disillusioned with Washington’s slow pace, while clashing with some of Trump’s cabinet members.

The only winner from the public Trump-Musk spat? Germany’s Merz. Merz, who sat mutely while Trump bashed Musk, had prepared to avoid a repeat of the ambushes that Trump unleashed on the Ukrainian and South African presidents in the Oval Office.

But in the end it was Musk who took the president’s fire.

Elon Musk is no longer riding shotgun with Donald Trump. (Pool via AP, File)

Overall, Wall Street stocks tumbled as The Dow Jones Industrial Average slumped 0.3 per cent to 42,319.74 and the broadbased S&P 500 Index lost 0.5 per cent to 5,939.30.

The tech-heavy Nasdaq Composite Index fell 0.8 per cent to 19,298.45.

Patrick O’Hare of Briefing.com said Tesla had weighed “heavily on the broader market,” particularly the consumer discretionary sector.

“But all in all, the market itself is holding up reasonably well, given the scope of that decline,” he added.

Investors also digested the outcome of a long-awaited phone call between Trump and Chinese President Xi Jinping, looking for signs that both leaders could open doors to a longer-lasting truce in trade tensions.

“There were no new negative developments,” O’Hare said, adding that markets appreciated the mutual approach of allowing more time to work things out.

Looking ahead, investors will be eyeing official employment data due tomorrow, to gauge the health of the US economy as Trump’s tariffs ripple through various sectors.

- with AFP