Tesla shares fall 7% ahead of Q2 deliveries after Musk, Trump reignite feud

Tesla's stock has experienced a significant decline, falling 7% from Friday's closing price of $323.63 to $300.71 by Tuesday. This drop comes just ahead of the company's anticipated second-quarter delivery figures, with analysts projecting around 387,000 deliveries—a 13% decrease from the nearly 444,000 units reported last year, according to insights from FactSet. Adding to the uncertainty, prediction market Kalshi indicated that traders expect deliveries to be even lower, estimating around 364,000. The electric vehicle manufacturer had seen a boost in share prices after launching a limited robotaxi service in Austin, Texas, at the end of June, alongside CEO Elon Musk's announcement of the company's first 'driverless delivery' of a vehicle. However, the stock's momentum shifted dramatically following Musk's recent public spat with former President Donald Trump regarding the One Big Beautiful Bill Act. This significant spending legislation, which Trump supports, is slated for a final vote in the House. It aims to benefit higher-income households while drastically cutting funding for programs like Medicaid and food assistance. Although Musk did not directly criticize these specific cuts, he voiced concerns on X, suggesting that the bill could exacerbate the U.S. deficit and elevate the debt ceiling. The Congressional Budget Office estimates that the bill's tax cuts could add approximately $3 trillion to the national debt over the next ten years. Additionally, Musk has expressed discontent with provisions that would reduce funding for renewable energy initiatives in the U.S. and eliminate tax credits for electric vehicles. Analysts predict these changes could lead to a decrease in EV sales for Tesla by around 100,000 units annually by 2035, as noted by the think tank Energy Innovation. This bill could also impact Tesla’s Energy division, which markets solar and battery storage solutions to utilities and clean energy developers, with expectations of more than 350 gigawatts of renewable energy development being lost over the same period. In a recent statement, Trump remarked that Musk appeared 'upset' about potentially losing his electric vehicle mandates, implying that Musk might face even greater losses related to subsidies and contracts that his various companies have relied upon. Since 2008, SpaceX has secured over $22 billion from federal contracts, including agreements with NASA and the U.S. Air Force. Meanwhile, Tesla has reported $11.8 billion in sales from automotive regulatory credits since 2015, a revenue stream that has significantly bolstered the company's net income—accounting for about 60% of its net income in the second quarter of 2024, as per an assessment by FedScout's CEO, Geoff Orazem. As tensions rise between Musk and Trump, the future of Tesla and its market performance remains uncertain amidst these political and economic developments.