• Tesla shares fell over 8% amid escalating tensions between Elon Musk and Donald Trump.
• Musk criticized Trump's tax bill as a "disgusting abomination," impacting investor confidence.
• The dissolution of Musk and Trump’s previously beneficial relationship poses risks for Tesla's market performance.

Tesla shares took a significant hit, dropping more than 8% on Thursday, following a public spat between CEO Elon Musk and President Donald Trump. Musk's criticism of Trump's tax legislation, which he referred to as a "disgusting abomination" on his platform X, has raised concerns among investors regarding the stability of his vast business empire. The fallout has compounded as concerns over sales in key markets like Europe, China, and California have grown, despite an overall increase in electric vehicle demand, according to Reuters, Al Jazeera, and India Times.

Trump remarked that Musk's dissatisfaction is linked to the removal of tax incentives for electric vehicles included in the proposed bill. "Look, Elon and I had a great relationship. I don't know if we will anymore,” Trump stated, highlighting the strain in their relationship that has historically benefited Musk's business ventures. This rupture has contributed to a decline in Tesla's sales and heightened investor anxiety, according to Reuters and Al Jazeera.

Musk's recent distancing from the administration, coupled with backlash from protests tied to Tesla, appears to have frustrated many potential buyers, particularly those aligned with Democratic views. "Elon’s politics continue to harm the stock," said Dennis Dick, Tesla shareholder and chief strategist at Stock Trader Network, underscoring the potential pitfalls for Musk's broader array of companies, including SpaceX and Starlink, which rely on favorable regulatory conditions. This situation has led to a 12% drop in Tesla shares since May 27, as the stock's volatility remains a concern for investors, as reported by India Times and Al Jazeera.

Overall, Tesla shares have decreased 22% since the start of the year, reflecting ongoing uncertainties surrounding the company’s futures, primarily driven by political influences and the anticipated impacts of legislative changes on its profitability. Experts estimate that the broader implications of the tax bill, if passed, could adversely affect Tesla’s year-end profit by as much as $1.2 billion, thus aggravating the current market situation, according to Reuters, Al Jazeera, and India Times.