10:49 AM EDT, 07/01/2025 (MT Newswires) -- Tesla's (TSLA) investors are concerned that renewed tensions between Chief Executive Elon Musk and President Donald Trump could pose regulatory headwinds to the electric vehicle maker's autonomous-driving journey, Wedbush Securities said Tuesday.

Shares of Tesla were down 5.4% intraday after Musk and Trump again traded heated comments against each other on social media. The stock has lost 26% so far this year.

The US leader suggested that the Department of Government Efficiency, which Musk led early in Trump's administration, should review any federal grants to Tesla and Musk's SpaceX. Trump said on Truth Social that Musk "would probably have to close up shop and head back home to South Africa" if government subsidies are removed.

That came after Musk, Trump's former ally, stepped up criticism of Trump's tax and spending bill, currently in Congress.

The situation "remains an overhang on Tesla's stock with investors fearing that the Trump administration will be more hawkish and show scrutiny around Musk related US government spending related to Tesla/SpaceX and most importantly the autonomous future with the regulatory environment key to the future of Robotaxis and Cybercabs," Wedbush analysts including Daniel Ives wrote.

Last month, Tesla started offering rides in its Robotaxis in Texas, while the automaker completed its first driverless delivery of a new vehicle to a customer.

Musk and Trump got into a bitter online feud in June over the Trump administration's proposed bill before the EV maker's CEO expressed regret over his criticism of the US leader.

Ives said the situation will eventually calm down again. Wedbush is maintaining its outperform rating on Tesla with a price target of $500.

"We believe this situation will settle and at the end of the day Musk needs Trump and Trump needs Musk given the (artificial intelligence) arms race going on between the US and China," the analyst said. "Tesla investors want Musk to focus on driving Tesla and stop this political angle."

Price: 301.97, Change: -15.69, Percent Change: -4.94