Tesla CEO Elon Musk officially exited his role as a special government employee in May, and his fallout with President Donald Trump over the One Big Beautiful Bill Act added to Tesla's struggles early in 2025, sending stocks plummeting.
While the company regained some of its value as time passed and Musk tried to make amends, the Associated Press reported that Tesla shares continued their volatile year after Musk began to criticize the Trump administration anew after the signing of the "Big Beautiful Bill" on July 4.
What's happening?
On July 7, Tesla shares dropped 7% after Musk continued to signal his displeasure with the newly passed legislation, per the AP.
About a month prior to signing the final version of the bill, President Trump suggested that Musk was upset about the legislation's elimination of tax credits for electric vehicles.
For his part, Musk wrote on the social platform X that the EV cuts were "very unfair" because the bill didn't eliminate oil and gas subsidies but said he was taking issue with the fact that the bill is projected to add trillions to the national debt, according to the Congressional Budget Office.
On July 5, after the Big Beautiful Bill became official, Musk took to X to announce he was forming a new political party, continuing his scathing criticism of Trump, writing, "When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy."
The following day, on Truth Social, Trump said that he was sad to see that Musk had gone "off the rails" and become "a TRAIN WRECK over the past five weeks."
Why is this important?
The reignition of Musk's feud with Trump worried investors. While increased competition in the EV market has been a contributing factor to Tesla's declining sales in the first two quarters of 2025, Musk's involvement in politics has also played a role, causing some consumers to view the brand unfavorably and associate support for Tesla as an endorsement of Musk's politics.
Wedbush Securities analyst Dan Ives suggested to clients that Musk's fallout with Trump could be a foreboding sign for all of his companies because they receive federal subsidies.
"With the autonomous future ahead and the AI Revolution in full force Musk/Tesla do not need to keep poking the bear as Trump can create more hurdles for Musk/Tesla/SpaceX over the coming years if this political battle gets nastier heading into mid-terms in 2026," he said, per the AP.
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Despite Tesla's roller-coaster year, demand for EVs remains strong. The International Energy Agency's Global EV Outlook estimates that EVs will account for around 25% of cars sold globally in 2025, with more affordable options hitting the market as automakers like BYD, Ford, Rivian, BMW, and more invest in EV technology and pressure Tesla for the EV market crown.
Many consumers point to their savings on maintenance and energy compared to gas-powered vehicles as their reasons for buying an EV, while others are drawn in by the fact that EVs don't generate any tailpipe pollution, making them more eco-friendly and better for public health.
Domestically, EV sales experienced a slight dip in the second quarter of the year compared to 2024 but saw a 1.5% year-over-year increase over the first half of 2025, according to Cox Automotive's Kelley Blue Book, which suggested the small year-over-year Q2 decline was result of a maturing market, while a Q1 increase "may well be the start of a rush ahead of the federal incentive phase-out."
Consumers hoping to maximize their long-term savings on an EV may want to take action before the federal tax credits end Sept. 30.
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