Tesla shares drop after Elon Musk says he will start a political party

Tesla shares drop after Elon Musk says he will start a political party


Tesla CEO Elon Musk attends the Saudi-U.S. Investment Forum, in Riyadh, Saudi Arabia, May 13, 2025.

Hamad I Mohammed | Reuters

Tesla stock fell about 7% on Monday after CEO Elon Musk announced plans to form a new political party.

The stock was on pace for its worst day since June 5, when it fell 14% as the clash between Musk and President Donald Trump erupted.

Musk said Saturday that the party would be called the “America Party” and could focus “on just 2 or 3 Senate seats and 8 to 10 House districts.” He suggested this would be “enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people.”

The billionaire’s involvement in politics has been a point of contention for investors. Musk earlier this year was instrumental in the so-called Department of Government Efficiency and worked closely with Trump — a move seen as potentially hurting Tesla’s brand.

Musk left DOGE in May, which helped Tesla’s stock.

Now the tech billionaire’s reinvolvement in the political arena is making investors nervous.

“Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story,” Dan Ives, global head of technology research at Wedbush Securities, said in a note Sunday.

“While the core Musk supporters will back Musk at every turn no matter what, there is broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track,” he wrote.

Musk’s previous political foray earned him Trump’s praise in the early days, but he has since drawn the ire of the U.S. president.

The two have clashed over various areas of policy, including Trump’s spending bill, which Musk has said would increase America’s debt burden. Musk has taken issue with particular cuts to tax credits and support for solar and wind energy and electric vehicles.

Trump on Sunday called Musk’s move to form a political party “ridiculous,” adding that the Tesla boss had gone “completely off the rails.”

Musk is contending with more than just political turmoil. Tesla reported a 14% year-on-year decline in car deliveries in the second quarter, missing expectations. The company is facing rising competition, especially in its key market, China.

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Tesla year-to-date stock chart.