Tesla stock fell sharply Monday morning after CEO Elon Musk announced plans to start a new political party called the “America Party,” adding fresh concerns to an already strained relationship with investors.
The electric vehicle giant’s shares dropped 6.3% in premarket trading, down to $295.65. The decline followed Musk’s weekend post on X (formerly Twitter), where he launched a poll asking his 225 million followers whether the U.S. needs a new political party. Nearly 79 million voted, over 65% said yes. He followed the poll with the announcement of his new political outfit, which he says will challenge both major U.S. parties.
This move has rattled analysts and shareholders alike, who were hoping Musk would shift his focus back to Tesla after stepping down from his role in Trump’s Department of Government Efficiency. Instead, Musk has gone deeper into politics, just as Tesla is entering a make-or-break period for its core business and its highly anticipated robotaxi and humanoid robot launches.
Analyst Dan Ives from Wedbush Securities minced no words in a note Sunday, calling Musk’s move “exactly the opposite direction Tesla investors want right now.” Ives emphasized that Tesla is on the cusp of a potential transformation with its self-driving taxi tech, projected to be worth billions. There’s also a planned rollout of humanoid robots in 2026. But all of that could be overshadowed by political distractions.
Meanwhile, former President Donald Trump responded on his own platform, mocking Musk’s third-party idea as “a train wreck” and claiming it would only add chaos to the political landscape. Trump and Musk have been increasingly critical of each other in public in recent months, which has spilled over into Musk’s business dealings.
For Tesla, the damage isn’t just reputational. Its core business is underperforming. The company sold 721,000 cars in the first half of 2025, that’s 13% lower than the same period last year and far short of the 970,000 Wall Street had hoped for. Revised forecasts now expect 1.7 million total vehicles sold this year, compared to 1.8 million in 2024.
The political backlash may be a contributing factor. Tesla has long attracted environmentally conscious, left-leaning buyers, a demographic that’s cooled toward Musk as his political alignment has become more combative and overt. On Tesla’s Q1 earnings call, management acknowledged the brand image problem, noting challenges in public perception.
Tesla will release its Q2 earnings on July 23. That call will now carry even more weight, as investors look for reassurances that Musk hasn’t taken his eye off the company’s operations. With robotaxis and AI robotics still in development and not generating revenue, Tesla remains heavily reliant on its vehicle sales, which are slipping.
Tesla’s stock performance tells the story of investor mood swings. Since the November election, the stock is up 25%. It rallied 17% after Musk hinted at leaving DOGE in April. But it has since dropped 8% following the very public feud with Trump in June. Monday’s premarket slide marks another sharp shift in sentiment.
Despite the political turbulence, Ives maintains a “Buy” rating and a $500 price target for Tesla. But he warns that Musk is exhausting even his strongest supporters. “There was initial relief when Musk left DOGE, but that relief didn’t last,” Ives wrote. “We’re back in a place where Tesla’s biggest asset is also its biggest liability.”
Technical analysts are watching support levels, with Fairlead Strategies’ Katie Stockton pointing to $300 as a key price floor. A drop below that level could trigger broader selling, although she’s not making a call based on fundamentals.
As for the political consequences of Musk’s “America Party,” they’re unclear. Legal scholar Carl Tobias notes that the timing, ahead of the 2026 midterms, could destabilize an already divided Congress, where both major parties are fighting for razor-thin majorities. Treasury Secretary Scott Bessent weighed in Sunday, saying Musk’s popularity with voters doesn’t match the popularity of his cost-cutting DOGE policies.
Bessent also suggested that Tesla’s board, and those of Musk’s other companies, likely weren’t thrilled with the America Party rollout. “They probably want him to get back to work,” he told CNN.
That’s a sentiment many shareholders now seem to share.
Leo Cruz brings sharp insights into the world of politics, offering balanced reporting and analysis on the latest policies, elections, and global political events. With years of experience covering campaigns and interviewing world leaders, Leo ensures readers are always informed and engaged.
