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Tesla Inc.’s shares experienced a notable rise during early trading on Friday following an indication by Elon Musk that he may be willing to mend fences with President Donald Trump. This development comes after a heated public argument between the two prominent figures on social media platforms just a day earlier.

The CEO of Tesla and SpaceX agreed with a suggestion from a social media user on the platform X to “cool off and take a step back for a couple of days.” In another interchange, Musk responded positively to billionaire Bill Ackman, who suggested that Musk and Trump reconcile for the benefit of the country, acknowledging that Ackman “was not wrong.” As a result, Tesla shares climbed 4.4% as of 7:12 a.m. before the start of regular trading in New York. This rally came after a sharp 14% plunge on Thursday, which erased $153 billion from Tesla’s market value, marking its most significant drop in nearly three months.

Investor concern had previously grown over the potential fallout between Musk, who leads a vast business empire, and Trump, whose administration controls significant federal spending that benefits Musk's companies. On Thursday, President Trump expressed his disappointment with Musk’s criticism of his tax policy bill and indicated that he had requested Musk’s departure from the administration. Musk had retaliated with multiple social media posts, including a claim that Trump would have lost the election without his support and a controversial statement about decommissioning a SpaceX craft used by the US, which he later retracted.

The public spat represented a dramatic shift in what was once a potent political partnership. Musk had invested over $250 million to support Trump’s re-election campaign. Trump, in return, had tasked Musk with overseeing a major initiative to reduce government expenditure and restructure the federal bureaucracy, a role Musk stepped back from last week.

Ross Gerber, the CEO of Tesla shareholder Gerber Kawasaki, appeared on Bloomberg TV, criticizing Musk’s conduct, warning that it could lead to lawsuits from investors and diminish SpaceX's value significantly. He stressed that Musk’s actions were not serving his shareholders' interests and warned of the potential disintegration of Musk's business empire.

The dispute also fueled fears that President Trump might use governmental powers against Musk’s companies, mirroring previous actions against other adversaries. Furthermore, the conflict casts uncertainty over whether Trump’s administration will implement policy changes that Musk has been advocating for, such as a framework for the broader deployment of autonomous vehicles crucial to Tesla’s future and market value.

Trump’s proposed tax bill threatens Tesla's financial stability by aiming to eliminate a valuable $7,500 credit for some electric vehicle buyers by the year’s end instead of phasing it out over seven years. Analysts from JPMorgan estimate this could cause a $1.2 billion hit to Tesla’s annual profit. Musk has actively lobbied Republican lawmakers, including House Speaker Mike Johnson, to preserve these crucial incentives.

Moreover, new legislation passed by the Senate targeting California’s electric vehicle mandates presents a potential $2 billion setback for Tesla’s regulatory credits sales, adding to the financial pressures on the company. Combined, these legislative measures could jeopardize half of Tesla’s predicted earnings before interest and taxes for this year, a May 30 report from JPMorgan indicated.

Tesla and its division focusing on solar systems and batteries have both strongly criticized the Republican bill for undermining clean energy tax credits, arguing that such abrupt policy changes would hinder US energy independence and grid reliability. The threatened policies had been established under President Joe Biden's administration to promote domestic production of clean energy and electric vehicles, contributing to a 7.3% increase in US electric vehicle sales to a record 1.3 million units last year.

As tensions simmer and ramifications unfold, Musk's potential reconciliation with Trump may prove a pivotal factor for Tesla’s path forward. Tesla has not yet responded to requests for comment.