Tesla stock rebound 4% after $152b market drop

Tesla shares rebounded nearly 4% on June 6, recovering some losses after a sharp drop wiped out US$152 billion in market value.

The decline followed a public dispute between Tesla CEO Elon Musk and President Donald Trump over a proposed tax and spending bill.

Musk criticized Trump’s plan to eliminate the US$7,500 EV tax incentive by 2025, and Trump responded by suggesting he might cut federal contracts with Musk’s companies, including SpaceX.

Tesla shares have declined 26.9% this year, including a 14% drop on June 5.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Tesla’s financial vulnerability to policy changes reveals strategic shift

Musk’s fierce opposition to losing the $7,500 EV tax credit marks a complete reversal from his previous stance that Tesla would benefit from its elimination 1.

This shift reflects Tesla’s deteriorating financial position, with the company reporting a 71% drop in net income in Q1 2025 and facing declining sales across key markets 1.

JPMorgan analysts estimate that losing the tax credit could cost Tesla approximately $1.2 billion annually, explaining Musk’s strong reaction to the proposed GOP bill 1.

The company has invested $240,000 in lobbying efforts in 2025 specifically to preserve the tax credit, demonstrating its growing dependence on government incentives 2.

Industry data shows that 50% of EVs are currently leased, with the tax credit significantly reducing monthly payments, making it crucial for maintaining consumer affordability in a market with intensifying competition 3.

2️⃣ Corporate brand damage from political activism shows measurable impact

Tesla’s once-loyal customer base has demonstrably eroded due to Musk’s political activities, with European sales falling by 45% in January 2025 according to market analysts 4.

The company’s stock has experienced extreme volatility, with a single day’s 14.3% drop following the Musk-Trump dispute wiping out approximately $151 billion in market value 5.

Public protests against Tesla have increased, with documented incidents of showroom demonstrations and customer testimonials expressing regret about their association with the brand 4.