Tesla shares dipped over 3% on Monday, July 7, following CEO Elon Musk’s surprise announcement of plans to form a new U.S. political party — a move that’s raising fresh questions about his focus and leadership at the electric vehicle giant.
The billionaire tech mogul revealed his political ambitions over the weekend, declaring plans to launch the “America Party,” further escalating his public rift with former U.S. President Donald Trump. The announcement shook investors and caused Tesla’s stock to slide in Frankfurt trading, with analysts predicting more losses when U.S. markets reopen after the Independence Day holiday.
Market watchers fear Musk’s increasing political entanglements could distract him from steering Tesla through a competitive and fast-evolving automotive industry.
“Elon Musk is Tesla’s biggest asset, but his political ambitions risk becoming its biggest liability,” said Dan Ives, a veteran analyst at Wedbush Securities. In a Sunday research note, Ives warned that Musk’s latest foray into politics might pressure Tesla’s board to act if the distraction deepens.
The timing of Musk’s political pivot has added to investor anxiety. Tesla is currently navigating challenges including slowing EV demand, global competition, and scrutiny over its Full Self-Driving software.
Former President Trump didn’t hold back, branding Musk’s “America Party” idea as “ridiculous” and questioning the billionaire’s influence in Washington. Trump specifically called out Musk’s connections to NASA, where a former SpaceX associate previously held a leadership role, suggesting a conflict of interest.
The controversy has reignited concerns among shareholders about Musk’s shifting priorities. With Tesla stock already under pressure in recent months, Monday’s drop reflects fears that Musk’s growing political involvement could derail key business decisions and tarnish the company’s public image.
