Stocks & NFTs
Tesla investors had a rough start to June 2025, as shares of the electric vehicle giant took a massive hit on June 5. With Tesla stock down more than 14% in a single day, traders and analysts alike scrambled to understand the sudden collapse. From political tensions to policy threats and sales slumps, several overlapping factors triggered the drop.
Much of the chaos began with a public feud between Tesla CEO Elon Musk and former President Donald Trump. Musk called Trump’s latest federal spending bill a “disgusting abomination,” criticizing its size and priorities. In response, Trump fired back on social media, calling Musk “crazy” and suggesting he may push to cancel federal contracts and subsidies for Musk-led companies, including Tesla.
Investors took these threats seriously. Tesla relies on favorable political relationships, especially with regard to EV credits and infrastructure funding. When that relationship soured overnight, market confidence took a hit. This unexpected political clash became one of the primary reasons behind Tesla's stock-down headlines that dominated the news cycle.
On June 5, Tesla shares plummeted by approximately 14.3%, closing at $284.70 and erasing over $150 billion in market capitalization. It was Tesla’s worst single-day decline since March 2025.
This wasn’t just a reaction to Musk’s political commentary. The sharp drop was exacerbated by institutional sell-offs, high-volume put-option trading, and general investor panic. Tesla stock-down trends also triggered algorithmic selling as price thresholds were crossed.
The sell-off wasn’t isolated. Volatility extended into the broader EV sector, but Tesla took the brunt due to its visibility and Musk’s headline-grabbing personality.
Another major pressure point is the proposed removal of the federal $7,500 EV tax credit, a key driver of Tesla sales in the U.S. A GOP-backed bill currently circulating in Congress aims to phase out these incentives in favor of traditional energy investments.
Analysts warn that without these credits, Tesla vehicles become significantly less competitive in the mass-market segment. Some estimate that Tesla could lose over $1.2 billion in annual profits if the credits are revoked. This news only fueled the downward momentum of Tesla stock movements in early June.
In addition, a separate proposal could block California from enforcing stricter EV mandates, which would directly affect Tesla’s largest U.S. market.
Making matters worse, Tesla vehicle delivery numbers in Germany saw a massive 36% drop in May 2025 on an annual basis. That remains on a further decrease throughout greater Europe, where the adoption of EVs has slowed amid economic uncertainty and rising interest rates.
Tesla has traditionally relied on international sales to balance regional volatility, but with Europe showing weakness, investors are left with fewer optimistic signals. The slump in overseas sales deepened market concerns, and with Tesla stock down so heavily, even bulls had to reconsider short-term expectations.
While political drama dominated headlines, internal execution issues also contributed to investor fear. Tesla’s highly anticipated Cybertruck has suffered from multiple delays, and recent deliveries revealed a series of quality control problems—including misaligned panels, cracking body components, and accelerator defects that prompted recalls.
The production delays and inconsistent performance have affected Tesla's innovation reputation, and when combined with expectations for high-margin new vehicles, the more the price of Tesla stock seems to be going down on the notion of overly promising and underdelivering. It is just another factor that is weighing Tesla's stock down amid the already fragile investor sentiment.
The markets reacted differently. Some institutional investors-the likes of Ross Gerber-called it a disaster and sold some Tesla shares; others, including Cathie Wood of ARK Invest, kept their long positions, citing Tesla's vision for AI and autonomy.
In extension to this argument, another is, "Is this opportunity to buy as a result of a downward slide of Tesla's stock, or is it indeed the starting phase of long-term revaluation?" For now, the answer still remains unclear, and, meanwhile, the public opinion about Tesla shares going down still holds sway in the media.
Despite the sell-off, Tesla’s long-term vision hasn’t changed. The company is still heavily invested in autonomous driving, with plans to unveil a robot taxi fleet in 2026. Tesla is also expanding its energy storage division and exploring licensing its Full Self-Driving (FSD) software.
If Tesla can deliver on these initiatives, the long-term case remains intact. However, the stock market’s reaction shows that investors are no longer giving Tesla unlimited patience. In a high-interest-rate environment, future growth must be backed by solid execution.
The Tesla stock down event of June 5 is a reminder that no company—even one led by Elon Musk—is immune to political, economic, and execution-related risks. While bulls remain hopeful, it’s clear the next chapter of Tesla’s growth story will require more than just ambition.
