The Direxion Daily TSLA Bull 2X Shares (TSLL), an exchange-traded fund that aims to deliver twice the daily performance of Tesla stock, plummeted 6.38% in pre-market trading on Monday. This sharp decline comes in the wake of a growing public feud between Tesla CEO Elon Musk and U.S. President Donald Trump, which has sent shockwaves through the electric vehicle (EV) market.
The conflict between Musk and Trump has raised significant concerns among investors about potential regulatory and political headwinds for Tesla. The immediate fallout of this rift could have severe implications for Tesla's business, particularly in the realm of government support for electric vehicles. There are fears that the Trump administration might move to eliminate or reduce EV subsidies and tax credits, which have been crucial in driving Tesla's sales growth. Analysts estimate that such measures could potentially reduce Tesla's 2025 delivery volume by up to 15%.
Furthermore, the deteriorating relationship between Musk and the federal government may jeopardize the long-standing benefits Tesla has enjoyed, including government contracts, loans, and regulatory credits. In the first quarter of 2025 alone, Tesla earned $595 million from regulatory credit sales, surpassing its net profit. The potential loss of these credits could significantly impact Tesla's profitability. As TSLL provides leveraged exposure to Tesla's stock performance, these concerns are amplified in its pre-market plunge, reflecting the heightened uncertainty surrounding Tesla's near-term prospects.
Comments