Tesla stock plunged 7% after CEO Elon Musk announced the formation of a new political movement—the “America Party” intensifying his ongoing feud with former U.S. President Donald Trump. The fallout from this latest development is being felt directly by investors, as market confidence in Tesla continues to waver.
In a weekend statement, Musk revealed plans to influence key U.S. Congressional seats, saying that winning “just 2 or 3 Senate seats and 8 to 10 House districts” could be enough to shape U.S. legislation. He framed the move as a pushback against policies that don’t reflect the “true will of the people.”
However, the announcement has spooked Tesla shareholders, who are already navigating a tough quarter marked by falling deliveries, shrinking margins, and intensifying EV competition, especially in China.
“This is exactly the opposite direction that Tesla investors want Musk to take right now,” said Dan Ives, global head of tech research at Wedbush Securities.
The feud with Trump reached a new low after the former president called Musk’s political ambitions “ridiculous” and accused him of going “completely off the rails.” Musk, once aligned with Trump via his brief stint on the DOGE (Department of Government Efficiency) panel, has since criticized Trump’s fiscal policies, especially those affecting green energy incentives.
Meanwhile, Tesla reported a 14% year-on-year drop in Q2 vehicle deliveries, slightly better than worst-case forecasts. While this led to a brief stock uptick last week, Tesla’s shares remain down 22% year-to-date.
For many institutional investors, the concern is strategic—not just reputational. With mounting global headwinds and growing pressure to stay innovative, there’s rising fear that Musk’s political distractions could derail Tesla’s core mission.