• Elon Musk backs off criticism of Donald Trump after intervention from VP JD Vance and White House Chief of Staff Susie Wiles.
  • Tesla shares dropped 14% amid tensions, erasing $150B in market value before stabilizing post-apology.
  • Trump signals openness to reconciliation, easing fears of government contract cancellations.

Musk Walks Back Trump Criticism

Elon Musk issued a public apology Wednesday for his recent attacks on Donald Trump, citing pressure from Vice President JD Vance and White House Chief of Staff Susie Wiles to de-escalate tensions. "I regret some of my posts... they went too far," Musk wrote on X, referring to now-deleted comments that criticized Trump’s tax policies and implied ties to Jeffrey Epstein.

The confrontation peaked June 5 when Trump threatened to cancel federal contracts with Musk’s companies, triggering a 14% plunge in Tesla’s stock that wiped out $150 billion in market capitalization. Sources familiar with the matter say Vance played a key mediating role behind the scenes. By Thursday, Trump had softened his stance, telling reporters, "I don’t blame him for anything."

Market Impact and Tesla’s Fragile Position

The volatility highlights Tesla’s exposure to political risk as it struggles with thinning margins. The EV maker reported just a 2% operating margin in Q1 2025, relying heavily on regulatory credit sales to stay profitable. Analysts note that Trump’s proposed elimination of EV tax credits could further pressure earnings.

While shares rebounded 3% following Musk’s apology, the episode underscores how Musk’s political engagements increasingly move markets. "When the CEO’s personal brand is this tied to the company, every tweet carries enterprise risk," said one institutional investor who asked not to be named discussing sensitive matters. Tesla didn’t respond to requests for comment on potential contingency planning.

What Comes Next

With Trump leading in polls, investors will watch whether the détente holds. The former president’s campaign has quietly reassured donors that no immediate action will be taken against Musk’s companies, according to two people briefed on the discussions. But long-term concerns persist about Tesla’s reliance on government incentives—especially with Trump proposing to redirect EV subsidies to fossil fuel projects.

For now, the focus shifts to Tesla’s upcoming Cybertruck production numbers and whether Musk can keep corporate and political controversies separate. As one Wall Street analyst put it: "The market hates uncertainty more than it hates any particular policy."