• Trump claims Elon Musk was "very honest" about opposing EV mandates, escalating their public feud.
  • Tesla shares drop sharply as Trump threatens to cut federal subsidies, risking over $1 billion in losses.
  • The administration moves to overturn California's emissions standards, signaling a broader clean energy policy reversal.

A Clash Over Clean Energy Policy

Former President Donald Trump has accused Tesla CEO Elon Musk of being "very honest" about his opposition to electric vehicle (EV) mandates, reigniting tensions between the two high-profile figures. The remarks came as Trump's administration prepares to roll back federal EV subsidies and overturn California's stricter emissions standards—a move analysts say could cost Tesla upwards of $1.2 billion in lost incentives.

Tesla’s stock plunged as much as 18% in late trading following Trump’s threats to terminate federal contracts and subsidies for Musk’s companies, including SpaceX. The sell-off reflects investor concerns over the potential financial fallout from abrupt policy shifts. "He went CRAZY when we ended the mandates," Trump said, referencing Musk’s vocal pushback against the administration’s stance.

Regulatory Uncertainty Looms

The administration is leveraging the Congressional Review Act to revoke California’s authority to enforce its own EV adoption targets, marking the first such use of the law since 1996. This sets a precedent for federal-state clashes over environmental regulation. While Tesla has advocated for a gradual phase-out of tax credits, warning that sudden cuts could harm energy independence, the administration appears set on a faster unwind.

"Without these incentives, the entire EV sector faces headwinds," said one industry analyst, speaking on condition of anonymity. "Tesla might weather it better than startups, but consumer adoption could slow." The policy reversal has drawn criticism from clean energy advocates and state officials, who argue it undermines years of progress toward emissions reductions.

Market Reactions and Next Steps

Tesla’s recent volatility underscores the high stakes for Musk’s empire. The company, which benefited from federal loans and tax credits in its early days, now faces a landscape where government support may vanish overnight. Meanwhile, Trump’s targeting of SpaceX contracts adds another layer of risk, though details on potential cuts remain unclear.

Attempts to reach Tesla and White House representatives for comment were unsuccessful. As the feud plays out publicly, market watchers are bracing for further turbulence—both in Tesla’s share price and in the broader clean energy sector.