Tesla shares drop on Musk, Trump feud ahead of Q2 deliveries

Tesla's stock has experienced a notable decline, plummeting 7% from Friday's closing price of $323.63 to $300.71 by Tuesday. This drop comes as anticipation builds around the company's upcoming report on second-quarter vehicle deliveries. Analysts on Wall Street are projecting that Tesla will announce approximately 387,000 deliveries—a decrease of 13% compared to last year's nearly 444,000 deliveries, as outlined in a consensus by FactSet. Meanwhile, prediction market Kalshi reports that its traders are estimating deliveries closer to 364,000. The electric vehicle manufacturer had seen a rise in stock prices recently following the launch of a limited robotaxi service in Austin, Texas, at the end of June. CEO Elon Musk even celebrated the first 'driverless delivery' of a vehicle to a customer in the same city. However, the situation shifted dramatically after Musk reignited a feud with former President Donald Trump over the One Big Beautiful Bill Act, a massive spending package that Trump supports and which is now poised for a crucial vote in the House. This legislation is set to benefit wealthier households in the U.S. while significantly reducing funding for programs like Medicaid and food assistance—cuts to which Musk has not publicly opposed. However, he did express concerns on social media, warning that the bill could exacerbate the national deficit and raise the debt ceiling. According to the Congressional Budget Office, the tax cuts included in the bill could add approximately $3 trillion to the national debt over the next decade. Musk has been vocal about his opposition to elements of the bill that would slash funding for renewable energy initiatives in the U.S. and phase out tax credits for electric vehicles. Analysts from Energy Innovation suggest that these changes could lead to a reduction in Tesla's sales of electric vehicles by about 100,000 units annually by 2035. Additionally, the bill is projected to hinder renewable energy development by over 350 gigawatts during the same timeframe, potentially impacting Tesla’s energy division, which markets solar and battery storage solutions to utilities and clean energy developers. In a response to the situation, Trump remarked that Musk appears to be concerned about losing his electric vehicle mandate, suggesting that he could face even greater losses in the future. Trump’s comments allude to the various subsidies and contracts that have benefited Musk’s ventures. Since 2008, SpaceX has secured over $22 billion from federal contracts, including significant agreements with NASA and the U.S. military. Furthermore, Tesla has generated $11.8 billion in revenue from the sale of automotive regulatory credits since 2015, which play a crucial role in the company's financial health, contributing about 60% to its net income in the second quarter of 2024.