Tesla shares rebounded 4.66% in early Friday trading after a sharp 14% drop the previous day, triggered by a public feud between CEO Elon Musk and former President Donald Trump over clean energy budget cuts. The feud erased $152 billion from Tesla's market value, pushing its capitalization below $1 trillion and contributing to volatility in the tech sector. Despite Tesla's steep decline, broader U.S. markets remained relatively steady; the Nasdaq gained modestly following the selloff.
The backlash began after Musk publicly criticized Trump's budget proposal, which included cuts to clean energy subsidies important to Tesla's business. Trump responded with a harsh rebuke, escalating tensions and stoking investor anxiety focused on Tesla’s share price.
Friday’s partial rebound was supported by optimism around Tesla's upcoming robotaxi launch in Austin, Texas—a fully autonomous vehicle program that could create new revenue streams and offset pressure on its core electric vehicle business amid rising competition and squeezed margins.
Meanwhile, the White House reportedly intervened to arrange talks with Musk to ease tensions and prevent further damage. The dispute raises concerns about Tesla’s future relationship with Washington, at a time when federal support remains pivotal for electric vehicle expansion.
Investors are closely watching whether Tesla can redirect focus toward innovation and operational performance amid the political controversy and market uncertainty. Broader markets continue to eye economic data and policy signals that may influence future trends.