Musk’s New Party Sends TSLA Stock Crashing

Tesla, one of Wall Street’s most valuable and closely watched companies, started the week with a sharp decline. The electric carmaker’s stock fell nearly 7% in pre-market trading on Monday. The reason? A surprising political twist led by its CEO, Elon Musk.

On Sunday night, Musk announced the creation of a new political party in the United States: the “America Party.” The proposal is bold — and controversial. Musk promises an alternative to the current two-party system, calling Democrats “stagnant” and Republicans “disloyal.”

The timing of the announcement, however, did not sit well with Wall Street. Investors reacted negatively, worried that Musk is now more focused on his political persona than Tesla’s real business challenges — which have already made 2025 a difficult year. The market’s response was swift: a sharp 7% pre-market drop and criticism from analysts and shareholders.

Among them is Dan Ives from Wedbush Securities. In an interview with CNBC, Ives called the move “misguided” and warned that Tesla “needs focus on products and technology, not partisan politics.” According to him, investors expect Musk to prioritize the rollout of robotaxis and global sales recovery — not further polarize his public image.

Musk’s clash with Donald Trump also escalated. In response to the party announcement, Trump posted on Truth Social, calling Musk an “ungrateful billionaire” and accusing him of trying to “divide the American right.” The growing tension between the two, which had been simmering behind the scenes, became public — adding fuel to investor concerns.

They now see political controversy as a reputational risk for Tesla, which has long positioned itself as an innovative brand, now potentially entangled in partisan ideology.

Another factor weighing on TSLA stock is a proposed cut to EV tax credits in Trump’s new budget plan. Tesla — already down 21% in market value in 2025 as of the end of June — is facing an increasingly difficult business environment.

The company’s most recent delivery report showed a 13.5% drop in vehicle volume for Q2 — the second consecutive quarterly decline, in a market that is becoming increasingly competitive. Rivals like BYD, Ford, and Hyundai are gaining ground while Tesla fights to hold onto its lead.

Still, not all news is negative. In Texas, Tesla completed the first commercial delivery of a fully autonomous vehicle — a major milestone for both the company and the automotive sector. Yet, the market’s response was muted. The innovation alone couldn’t offset the wave of uncertainty stirred by Musk’s political involvement.

Some analysts still believe in the stock’s potential. Market consensus shows a “hold” recommendation, with target prices ranging between $295 and $500. But many caution that as long as Musk remains entangled in political battles, Tesla’s brand risk will remain high.

The outlook for the coming months is uncertain. With the presidential election approaching and Musk now acting directly on the political stage, investors will have to weigh not just Tesla’s performance, but the impact of its CEO’s charisma — and controversy.

They, who once viewed Musk as a visionary, are now divided between admiration for the entrepreneur and concern that his public exposure could stall the company’s recovery.

In times of uncertainty, markets want clarity. And Elon Musk’s new party adds an extra layer of unpredictability to Tesla’s equation.