Elon Musk’s Political Party Announcement Triggers 7% Drop in Tesla Shares
Over the weekend, Musk announced on social media that his envisioned political group could focus on winning “just 2 or 3 Senate seats and 8 to 10 House districts.”
Tesla CEO and tech billionaire Elon Musk has unveiled plans to launch a new political party, the “America Party,” heightening investor concerns over his increasing involvement in politics.
Musk stated on social media that the party would aim to secure “just 2 or 3 Senate seats and 8 to 10 House districts,” a strategy he believes would be enough to “serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people.”
However, Musk’s latest political ambitions emerge at a sensitive moment for Tesla, which is facing declining vehicle deliveries and intensified global competition, particularly in China, according to CNBC.
Financial analysts caution that Musk’s renewed political engagement may divert his attention from urgent business issues at Tesla.
“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,” said Dan Ives, global head of technology research at Wedbush Securities, in a note on Sunday.
Although Musk still enjoys strong support from his loyal fanbase, some Tesla investors are said to be feeling “exhaustion” over his persistent political pursuits.
“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,” Ives added.
Musk’s political involvement has stirred controversy before. Earlier this year, he joined the so-called Department of Government Efficiency (DOGE) under former President Donald Trump, raising fears that his political ties could harm Tesla’s image, particularly among environmentally minded consumers.
Musk left DOGE in May, a move analysts say helped boost Tesla’s stock. Yet his fresh political ambitions have revived investor anxiety.
Tensions between Musk and Trump have also escalated. While Trump initially praised Musk, their relationship has deteriorated over disagreements on policy issues, especially concerning federal spending, renewable energy incentives, and tax credits crucial to Tesla’s electric vehicle business.
On Sunday, Trump dismissed Musk’s new political initiative as ill-conceived.
“Musk’s move to form a political party is ridiculous,” Trump said, accusing the Tesla chief of having gone “completely off the rails.”
Musk’s political moves come as Tesla reported a 14% year-on-year drop in vehicle deliveries for the second quarter of 2025, missing market expectations.
Analysts link the decline to mounting competition from both traditional automakers and new EV startups, particularly in China — Tesla’s key growth market.
Industry experts caution that, given the operational and financial challenges Tesla currently faces, Musk should stay focused on guiding the company through these turbulent times rather than launching high-profile political campaigns.
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