Former U.S. President Donald Trump recently took to his social media platform Truth Social to launch a pointed criticism at Elon Musk and several of his companies — including Tesla, SpaceX, and Starlink — accusing them of being heavily reliant on government subsidies. He went so far as to suggest that the federal government should reconsider its support for these firms, claiming that Musk might be the single biggest recipient of subsidies in history. “Without those subsidies,” Trump wrote, “his companies might not have survived.”

The market didn’t take these remarks lightly. Tesla shares fell nearly 6% in pre-market trading on Tuesday, a clear signal that investors were rattled. The timing couldn’t be worse for Tesla, which is already navigating significant operational hurdles and intensifying market competition.

Despite Tesla’s efforts to expand its electric vehicle and energy businesses, and revenue forecasts projecting 17.5% growth by 2025, its global market share is gradually eroding. In key regions like Germany, France, and even California — once a Tesla stronghold — the company is no longer the dominant force it used to be. Rivals such as Waymo and other autonomous driving firms are also gaining ground.

To regain its competitive edge, Tesla is doubling down on artificial intelligence and autonomous driving, with plans to roll out a Robotaxi service in the near future. However, investor response has remained cautious. In California, for instance, Tesla’s EV market share has now dipped below the 50% mark — an indication that the competitive heat is intensifying.

Investor confidence in Tesla has been wavering. While the stock surged over 60% earlier in 2024, much of that gain has since evaporated — roughly $80 billion in market cap wiped out. Institutional ownership has also declined, now sitting at 48.74%, reflecting a growing sense of caution among large investors.

On Wall Street, analysts are taking a wait-and-see approach. Most maintain a “Hold” rating on the stock, with a 2025 price target median of $291.31 — about 1.25% below its current level. Only a small handful of analysts still rate it as a “Buy.”

It’s worth noting that the spat between Trump and Musk goes beyond just the question of federal subsidies. Musk has publicly taken issue with tax policies introduced during the Trump administration and has even floated the idea of launching a new political party “that truly cares about the people.” With the U.S. presidential election on the horizon, this ideological rift could further inflame market sentiment — and Tesla, caught in the middle, may not rise above the fray.

Looking ahead, investors should keep a close watch on any shifts in federal support for the clean energy sector, Tesla’s progress in tech innovation, and its ability to maintain competitiveness in key global markets. In today’s volatile landscape, Tesla’s challenges extend far beyond earnings reports — they are tightly interwoven with broader political and economic uncertainty at home and abroad.