Why Tesla Stock Is Plummeting Today

Source The Motley Fool

Shares of Tesla (NASDAQ: TSLA) are falling on Tuesday, down 4.3% as of 12:23 p.m. ET. The drop comes as the S&P 500 and Nasdaq Composite lost 0.1% and 0.8%, respectively.

Tesla CEO Elon Musk and President Donald Trump reignited their dormant social media conflict yesterday with Trump directly calling for the government to review the subsidies Musk's companies -- including Tesla -- receive.

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Trump calls for DOGE to look at Musk's companies

Musk took to X once again to criticize Trump's "Big Beautiful Bill" currently working its way through Congress. The bill is highly controversial, with the latest version expected to add $3.3 trillion to the U.S. national debt. The newest version also includes not just a repeal of clean energy subsidies included in previous versions, but a tax on certain green initiatives.

Musk took to X to criticize the bill and the government's "insane spending." Trump responded on Truth Social, saying, "Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa."

A pile of money.

Image source: Getty Images.

He went on to call for the Department of Government Efficiency (DOGE) -- which Musk recently stepped down from running -- to look into the subsidies, saying: "Perhaps we should have DOGE take a good, hard, look at this? BIG MONEY TO BE SAVED!!!"

Tesla investors are clearly worried the president may follow through on the threat.

Tesla is not in a great position

Tesla is seeing its sales decline in key markets across the globe. The rollout of its revamped Model Y is not as strong as many had hoped, as it faces increasing competition from legacy makers and Chinese rivals like BYD. I think the stock is significantly overvalued with a current price-to-earnings ratio (P/E) of 180.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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