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Donald Trump has promised to buy a Tesla in a show of support for Elon Musk after shares in the electric-car maker tumbled 15 per cent in a Wall Street sell-off sparked by fears over the US president’s economic policies.
Monday’s slump wiped out the gains for the shares since Trump’s election victory and leaves them more than 50 per cent below a record high hit in December.
Following the sell-off, Trump said on his Truth Social platform that he would buy a “brand new” Tesla on Tuesday “as a show of confidence and support for Elon Musk, a truly great American”.
He added: “Radical Left Lunatics, as they often do, are trying to illegally and collusively boycott Tesla.”
Standing beside Musk outside the White House on Tuesday, Trump repeated that he would buy a Tesla and said the billionaire had “been treated very unfairly by a very small group of people”.
“I just want people to know that he can’t be penalised for being a patriot,” he added.
Five Teslas, including a Cybertruck, were parked alongside. The president sat in a red Model S and described it as “beautiful”.
Tesla shares surged in the weeks following the election in November after Trump picked Musk, who donated more than $100mn to the Republican’s campaign, to lead a cost-cutting drive across government.
But Tesla has since been hit by a consumer backlash in Europe, where the billionaire has intervened in politics, including backing Germany’s far-right Alternative for Germany party in elections last month. Its US showrooms have also been targeted by protesters.
The company is also confronting a broad slowdown in the electric vehicle market and concerns over an ageing product portfolio.
Monday’s drop wiped $131bn from Tesla’s market capitalisation, leaving it at $714bn and less than half its December peak of $1.54tn.
Shares in Tesla were the hardest hit of the group of seven tech stocks that have powered the stock market higher over the past two years.
The Nasdaq Composite index fell 4 per cent, its biggest fall in two and a half years. The S&P 500 index lost 2.7 per cent, after falling 3.1 per cent last week in its worst weekly performance in six months.
Analysts said Monday’s declines came on the back of companies’ very high growth expectations, which investors were rapidly re-evaluating in the face of Trump’s aggressive trade policies and falling consumer confidence.
Tesla shares were up about 3.7 per cent in late afternoon trading on Tuesday.
Trump has been a vocal critic of electric vehicles, saying that former president Joe Biden’s effort to boost sales risked the “complete obliteration” of the US car industry.
Since returning to the White House in January, Trump has ditched a Biden administration target that by 2030 half of new US vehicles sold should be battery-powered. The administration has also indicated that a federal EV tax credit worth $7,500 to consumers could be axed.
Tesla investors are waiting to see whether the release of the group’s upgraded Model Y, scheduled for the first half of 2025, will help to reboot Tesla sales, which fell in Germany, France, Norway and China in February.
“The stark declines seen in year-on-year sales growth could be an indication of an ongoing sentiment issue impacting the company in addition to production cuts related to the Model Y,” said Tom Narayan, an analyst at RBC Capital Markets.
