Tesla Inc., once the crown jewel of the electric vehicle revolution, has witnessed a staggering collapse in its market capitalization in 2025, shedding nearly $380 billion in value. From a position of strength at the start of the year, when it ranked eighth globally in market cap, Tesla has now slipped to the tenth spot as of June 5. This marks a 29.3% decline year-to-date, making it the single largest market value erosion among the world’s top publicly listed companies this year.

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Musk-Trump Feud Intensifies Tesla’s Market Volatility EV Market Headwinds Compound Tesla’s Challenges Tech Titans Reordered: Apple Slips, Microsoft Soars Tesla’s Place in the Market Hangs in the Balance

This extraordinary loss is driven by a combination of weakening electric vehicle demand, macroeconomic uncertainties, and an increasingly controversial public image of CEO Elon Musk. Tesla, which once held an almost untouchable status among growth investors, is now grappling with heightened investor skepticism and geopolitical crossfire. The company’s fall from grace has sent ripples across global equity markets and raised fundamental questions about the stability of market leaders in volatile political climates.

Highlights:

Tesla has lost $380 billion in market value in 2025
Market capitalization down 29.3%, dropping from 8th to 10th globally
Largest decline among major global companies so far this year

The unprecedented slide underscores a broader reevaluation of high-growth tech stocks and the risks associated with controversial leadership in politically sensitive times.

Musk-Trump Feud Intensifies Tesla’s Market Volatility

Tesla’s downward spiral accelerated this week following a very public feud between Elon Musk and former U.S. President Donald Trump. The tension erupted after Musk used his social media platform, X, to criticize Trump’s tax and spending legislation. In retaliation, Trump threatened to revoke federal contracts with Musk’s companies, including Tesla and SpaceX, igniting fresh fears about government support and regulatory hostility.

The political row rattled investors, sending Tesla shares tumbling during Thursday’s trading session. Concerns mounted over potential disruptions to Tesla’s access to key federal infrastructure projects and tax incentives, many of which have historically benefited the clean energy sector. This latest political firestorm has added a volatile new dimension to Tesla’s equity story, which has already been marred by multiple headwinds this year.

Amid the market chaos, there were signs of diplomatic backchanneling. On Friday, Tesla shares saw a modest rebound after reports emerged that White House aides were planning to mediate a truce between Musk and Trump, hoping to prevent the fallout from further damaging investor confidence and federal partnerships.

Highlights:

Musk’s criticism of Trump’s tax policy triggered retaliation
Trump threatened to cancel government contracts with Musk’s firms
Tesla stock dropped sharply on Thursday, followed by partial recovery Friday
White House reportedly intervening to ease tensions

The Musk-Trump standoff has spotlighted how politically exposed companies like Tesla are to executive leadership behavior and government sentiment.

EV Market Headwinds Compound Tesla’s Challenges

While political controversies have added fuel to Tesla’s decline, the company’s core challenge lies in the softening demand for electric vehicles globally. Industry analysts have pointed to an EV market slowdown, especially in mature regions like North America and Europe, where adoption has plateaued amid charging infrastructure concerns and declining subsidies.

Tesla’s recent sales data show underwhelming figures, with deliveries missing analyst expectations for multiple quarters. Rising competition from Chinese EV makers and established automakers transitioning aggressively into the EV space have also eaten into Tesla’s market share. Additionally, consumer fatigue with Tesla’s limited design refreshes and long-standing quality control issues has further eroded brand enthusiasm.

Elon Musk’s growing focus on unrelated ventures such as X, Neuralink, and SpaceX has sparked investor frustration about strategic dilution. Some institutional investors have voiced concern that Musk’s divided attention is weakening Tesla’s innovation pipeline and operational execution at a critical time for the EV sector.

Highlights:

Global EV demand has slowed in key markets
Tesla faces growing competition from Chinese and legacy automakers
Investor concerns over Musk’s multi-company commitments impacting focus
Sales and delivery metrics have failed to meet market expectations

The cooling enthusiasm for EVs and internal management distractions have intensified pressure on Tesla’s valuation and growth outlook.

Tech Titans Reordered: Apple Slips, Microsoft Soars

Tesla’s sharp decline is part of a broader reshuffling of global tech leaders in 2025. Apple Inc., which began the year as the most valuable publicly traded company, has also suffered significant erosion in market cap. As of Thursday, Apple’s valuation has dropped over 20% this year to $2.99 trillion, pushing it down to the third position in global rankings.

Apple’s decline is driven by weak sales performance in China, ongoing geopolitical tensions, and the negative impact of Trump’s renewed tariff threats on Chinese imports. Additionally, the company’s slower-than-expected progress in integrating artificial intelligence capabilities has left it trailing behind rivals in the rapidly evolving AI space.

In contrast, Microsoft has ascended to the top position in global market capitalization, buoyed by explosive demand for artificial intelligence technologies. Its strategic investments in OpenAI and deep integration of AI tools across the Microsoft 365 ecosystem have positioned the company as a frontrunner in enterprise-grade AI. Products like Microsoft Copilot have seen strong adoption, fueling optimism about long-term monetization and driving investor enthusiasm.

Highlights:

Apple’s market cap down over 20%, now valued at $2.99 trillion
Chinese sales slowdown and tariff concerns drag Apple lower
Microsoft becomes world’s most valuable company, driven by AI leadership
Microsoft Copilot and OpenAI partnership are key growth catalysts

The reordering of top tech companies illustrates the shifting investor preference toward firms leading in AI and software services, while hardware-focused giants like Tesla and Apple face headwinds.

Tesla’s Place in the Market Hangs in the Balance

With its valuation now hovering around $917 billion, Tesla’s future trajectory hinges on more than just the performance of its EV lineup. The company must navigate political landmines, rekindle investor confidence, and reassert its innovation edge in an increasingly competitive and volatile market. Elon Musk’s leadership remains a lightning rod — both a magnet for visionary growth and a source of destabilizing controversy.

In the near term, Tesla will need to deliver on financial performance, particularly in Q2 earnings, and stabilize executive communications to reassure stakeholders. Whether this reset can reverse the stock’s sharp decline remains uncertain, but the company’s challenges have undoubtedly reshaped its place in the global tech hierarchy for 2025.

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