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The four options Musk has to save Tesla

The car manufacturer Tesla has suffered a further blow after its chief executive, Elon Musk, became embroiled in a public feud with Donald Trump.

The spat erupted after the tech billionaire criticised a tax and spending bill backed by Trump, which among things includes an increase to the national debt ceiling – a policy Musk has publicly condemned.

    The pair subsequently exchanged insults on social media, culminating in Musk’s claim that the US President appears in the “Epstein files” – evidence collected by investigators into convicted sex offender Jeffrey Epstein – while Trump said Musk has “lost his mind”.

    Tesla stock fell by over 14 per cent on Thursday, with $153bn (£113bn) wiped off its market capitalisation, making it the second-worst hit the company has taken since 2020.

    Musk’s net worth also dropped by $34bn (£25bn).

    In March, Trump inappropriately held a White House press conference in front of one of Elon Musk’s Tesla cars (Photo: REUTERS/Kevin Lamarque/File Photo)

    While Tesla stock rose by 3.7 per cent on Friday, it dropped again by around one per cent shortly after US markets opened on Monday.

    Trump’s threats to ditch federal contracts and tax subsidies for Musk’s companies and the pair’s continuing feud have cast further doubt on the carmaker’s ability to recover in the immediate future.

    Trump also threatened Musk with “very serious consequences” if he backs Democratic candidates challenging the “big, beautiful bill”, which has moved to the US Senate after passing the Republican-controlled House of Representatives.

    Asked whether he intends to mend his relationship with Musk, the US President said: “No.”

    Trump told NBC News has “no intention” of speaking to Musk, who he accused of being “disrespectful to the office of the President”.

    Here, The i Paper explores the four options Musk could pursue to reverse the damage sustained by Tesla since his public feud with Trump.

    Peter Wells, professor of business and sustainability at Cardiff University, argued that one potential way forward for Musk is to step down from his companies, reducing the risk that personal controversies involving the billionaire will determine their success.

    The close link between Musk’s actions and the public’s perception of Tesla was made clear by protests that erupted at factories and showrooms across the globe after he was appointed as director of the so-called Department of Government Efficiency (Doge), which was tasked with reducing US government spending and cutting jobs.

    The protests and calls for a boycott against the carmaker have continued over the weekend despite Musk stepping down from the role last week.

    A protest against Elon Musk outside a Tesla dealership in Lisbon, Portugal (Photo: Pedro Nunes/Reuters)

    Professor Wells told The i Paper: “The core problem for Elon Musk and Tesla is that the market valuation of the business has long been out of line with the fundamentals of that business.

    “This over-valuation is a combination of hopes for the future and the association with Musk himself and is in part grounded in the disruptive entry of the Tesla brand into the global electric car market.

    “What we see now is that Tesla has lost its original disruptive edge, has failed to deliver the new products and innovations that could excite the market again, has become polarised as a brand with left-leaning environmentally concerned consumers wanting to distance themselves, and of course, Musk himself been distracted by too many other projects and activities.

    “Arguably the best thing for Musk to do would be to walk away from all (of his) businesses. It is often the case that the characteristics that make an individual suitable as an entrepreneur are not necessarily the same as those that make a good manager of an established business.

    “The overt and relatively ‘hard line’ conservative politics that Musk appears to endorse are an additional constraint.”

    Professor Wells warned that Tesla’s market value could see a sudden slump should Musk decide to withdraw from the company.

    “The problem is that were Musk to attempt to withdraw from the businesses there would be a major fall in their valuation – at least in the short term amid what would be an expensive disentangling of shareholdings.”

    2. Call for backup from Silicon Valley

    Electric cars, and the rules that regulate their use and sale, have been a point of contention between Musk and his Republican allies.

    Trump’s spending and tax bill is expected to take a large toll on the US’s electric car market, in which Tesla is the biggest manufacturer.

    The bill would abolish tax credits of up to $7,500 (£5,500) for people who buy electric cars, effectively raising the cost of buying the vehicles. It would also withdraw subsidies for battery factories and lithium refineries while ending financial support for electric vehicle charging stations.

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    In a major blow to Tesla, the bill may also overturn regulations allowing Tesla to sell clean air credits to other carmakers that do not meet environmental standards.

    Tesla sold regulatory credits worth $595m (£439m) in the first quarter of 2025 – exceeding the company’s net profit of $409m (£302m). Without the credits, Tesla would have reported a loss.

    Musk’s rollout of self-driving taxis, which he hopes could generate trillions of dollars for Tesla, has also been jeopardised after the National Highway Traffic Safety Administration launched an investigation into accidents involving the vehicles in Austin, Texas.

    Musk’s fight with Trump could mean that officials at the agency will have little to fear from the White House as they pursue their probe into the technology.

    While all this could be damaging for Tesla, Akhil Bhardwaj, senior lecturer of strategy and organisation at the University of Bath, highlighted that Musk is not Trump’s only ally in the tech industry, meaning he will continue to account for his policy’s impact on Silicon Valley when passing legislation.

    “Trump has the support of the ‘tech bros’, and he probably will not want to lose that,” Professor Bhardwaj said.

    Trump’s inauguration in January was attended by an entourage of tech moguls, including Meta CEO Mark Zuckerberg, Google CEO Sundar Pichai and Amazon founder Jeff Bezos.

    Amazon, Meta and OpenAI CEO Sam Altman all made donations of $1m (£737,000) to the US President’s inaugural fund, alongside Toyota and Uber.

    Meta’s Mark Zuckerberg (left), Lauren Sanchez and fiancé, Amazon’s Jeff Bezos; Google’s Sundar Pichai and X’s Elon Musk, at Donald Trump’s inauguration in January in Washington, DC (Photo: Julia Demaree Nikhinson/Getty Images)

    “Blocking innovations such as driverless taxis will hurt the Silicon Valley eco-system and not just Musk,” Professor Bhardwaj added.

    Garnering support from Silicon Valley to lobby the Trump administration against unfavourable regulatory changes could be useful for Musk, Professor Bhardwaj said, but suggested that a better option for the world’s richest man would be to “tone down his rhetoric and recede from the stage”.

    “At this stage, Musk might simply want to tone down his rhetoric and recede from the stage,” Professor Bhardwaj said. “Leveraging his contacts would also be useful, but I think not upstaging Trump is probably the most important thing he can do.”

    Musk has appeared to gradually withdraw from the feud, deleting inflammatory X posts, including his claim Trump featured in the Epstein files.

    On Thursday, Musk also responded “yes” to a user’s post that called for Trump to be impeached and replaced with Vice President JD Vance.

    By Saturday, the post appeared to have been removed from the platform.

    Responding to another billionaire and Trump backer, Bill Ackman, took to X urging the pair to “make peace for the benefit of our great country”, Musk wrote: “You’re not wrong.”

    4. Use government AI data

    Professor Bhardwaj suggested that Musk could offer Tesla a competitive advantage by utilising government information relating to artificial intelligence (AI) he gathered during his time at Doge.

    He said: “While this feud is concerning, a key factor to consider is Doge and, by extension, Musk’s access to private government data, which can be used to train AI.

    “After all, Musk himself has been touting Tesla’s shift in direction towards AI, and currently, unique data is ‘key’ to gaining an advantage.”

    After self-driving cars, Tesla aims to produce AI-trained humanoid robots.

    The i Paper has contacted Tesla for comment.

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