Tesla shares climbed by nearly 5 percent in early trading on Friday after their biggest one-day drop ever. On Thursday, shares tumbled 14 percent, erasing about $152 billion in market value. The slide followed a public clash between Tesla CEO Elon Musk and former President Donald Trump over federal budget cuts that could hurt electric vehicle incentives.
The selloff pushed Tesla’s valuation below the $1 trillion mark. Shares closed at $916 billion in value, down from more than $1.07 trillion at Wednesday’s close. To put this in view, the loss topped the full market value of India’s largest IT firm and made up most of the worth of the country’s top private bank. Musk himself saw about $34 billion vanish from his net worth in a few hours.
Roots of the Feud
The dispute began when Trump said he would cut or end subsidies for electric vehicles and solar projects if he returned to office. Musk fired back on social media, calling Trump’s plans “bad for America.” Trump answered by threatening to cancel SpaceX government contracts, worth at least $22 billion, that support national security and NASA missions. Musk at one point said SpaceX would start decommissioning its Dragon spacecraft. He later walked back that claim.
Impact on SpaceX Contracts
SpaceX has become vital to U.S. space work. Its Falcon rockets are now the main vehicles for military and spy satellites. Its Dragon capsule is the only ship that can carry astronauts to the International Space Station under a $5 billion NASA deal. The firm also holds contracts to build a deorbit system for the orbiting station and to launch Pentagon missions. Canceling these deals would slow key programs and face legal fights, experts say.
Broader Market Moves
The rebound in Tesla stock came as the wider market rose. The S&P 500 went up 1.1 percent and the Nasdaq Composite gained 1.3 percent. Investors cheered fresh jobs data that showed hiring kept pace without spiking inflation worries. Many saw Friday’s rally as a sign that the Musk-Trump clash may ease.
Reports from Politico and Reuters hinted at a phone call between Musk and Trump to smooth things over. But the White House denied any call was set. Trump told reporters he had little interest in talking to Musk, calling him “the man who has lost his mind.” Despite this, some analysts say Tesla’s long-term outlook remains bright.
Looking Ahead: Robotaxis
Tesla plans to launch its first robotaxi service in Austin, Texas, on June 12. The initial fleet of ten fully self-driving Model Y vehicles could mark a shift for the company. Tesla aims to let owners lease their cars to a crowdsourced ride-hailing network. If it works, this model could bring in as much as $10,000 per car each year. Analysts see this move as a big step toward making Tesla more than just a carmaker.
“This could be the defining moment for Tesla,” said one firm’s lead analyst. “The robotaxi fleet may open up a trillion-dollar growth path for the company.”
Investor Takeaway
Friday’s bounce showed that confidence can return quickly in fast-moving markets. For now, Tesla shares are on track to claw back some of Thursday’s losses. The feud with Trump still looms as a risk. Yet many investors focus more on Tesla’s push into self-driving cars and its strong production numbers than on the headline drama. If the robotaxi project gains traction, Tesla could clear the under-$1 trillion valuation soon.
