Despite the fluctuation of stock prices, Tesla's market value is still as high as US$1 trillion, far exceeding Toyota (US$290 billion). However, its current stock price is equivalent to 150 times its future earnings estimate, which is significantly higher than the valuation level of large technology stocks such as Nvidia, causing some fund managers to question its fundamental support.
US Securities Bank Wedbush analyzed that self-driving and artificial intelligence businesses originally brought Tesla a $1 trillion valuation support, but if regulation goes unfavorable, the company's valuation will be revaluated.
US President Trump and Tesla CEO Musk recently had a public confrontation with electric vehicle policies, which caused market concerns to heat up. Tesla's stock price fell 14.26% to US$284.7 on Thursday (June 5), US time, and its market value evaporated by US$153 billion (about S$196.7 billion) in one day, setting the largest single-day drop since the "Tesla protest wave" last year.
Musk recently criticized Trump's recent budget bill, saying that the bill "ends subsidies for electric vehicles." Trump immediately fought back, saying that Musk was dissatisfied with "losing government benefits."
Investors who were optimistic about Tesla because Musk had a close relationship with Trump may now reassess political risks. Steve Sosnick, chief strategist at Interactive Brokers, commented: "From the wind chaser to the wind chaser, Musk is facing a reality test."
According to financial magazine Forbes, the storm also shrank Musk's personal wealth by US$27 billion to US$388 billion.
Reuters reported that investors are afraid that the political storm will hinder the advancement of Tesla's Robotaxi plan. The National Highway Traffic Safety Administration (NHTSA) is currently investigating whether Tesla's "fully autonomous driving" software involves a fatal accident. If regulators mandate that autonomous vehicles must be equipped with radar and other sensing equipment, Tesla, which relies on camera solutions, will face pressure to adjust technology.
At present, the Trump administration has proposed to completely cancel the $7,500 electric car purchase subsidy by the end of 2025, and at the same time cut California's clean energy sales indicators, which may reduce Tesla's annual profit by $1.2 billion, and another $2.2 billion in regulatory points sales revenue will also be impacted, along with Dogecoin (DOGE), which has led to a plunge in Musk's main promotion.
Analysts believe that since Musk's public support for Trump's re-election in July last year, his political stance has caused controversy on many sides. Tesla's sales in major markets such as Europe, China and California, the United States have been affected, and have been under pressure since the beginning of the year, and market volatility is expected to continue.