Tesla Shares Slide as Elon Musk’s Political Ambitions Stir Investor Anxiety

Stock drops 8% after Musk unveils plans for a new “America Party,” raising concerns over distractions from Tesla’s core business amid falling deliveries and rising competition.

Tesla shares tumbled by 8% on Monday following CEO Elon Musk’s announcement that he is forming a new political party, deepening investor unease over his expanding focus beyond the electric vehicle giant. The party, which Musk revealed over the weekend, will be named the “America Party” and will target “2 or 3 Senate seats and 8 to 10 House districts,” aiming to wield kingmaker influence in U.S. politics.

Musk described the initiative as a way to ensure that legislation reflects “the true will of the people.” However, financial analysts and shareholders are raising alarms, viewing the move as a significant distraction at a time when Tesla is navigating intense competition and operational hurdles.

“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.

Earlier this year, Musk was involved in the Department of Government Efficiency (DOGE) under President Donald Trump’s administration, which had already raised concerns over brand alignment and investor confidence. His departure from DOGE in May had briefly restored optimism, with a positive impact on Tesla’s stock. However, this latest foray is reigniting worries.

The political move is also causing friction at the highest levels. President Trump, responding on Sunday, dismissed Musk’s announcement as “ridiculous” and claimed the billionaire had gone “completely off the rails.” Their relationship has soured over recent disagreements, particularly on spending policies and clean energy initiatives, where Musk has voiced opposition to cuts affecting EVs, solar, and wind industries.

Compounding the situation, Tesla recently reported a 14% year-over-year decline in Q2 vehicle deliveries, missing Wall Street expectations. The company is also facing mounting pressure in China, where local competitors are capturing market share at a rapid pace.

“There is a broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track,” Ives added, reflecting a sentiment shared by many stakeholders who fear that Tesla’s visionary CEO is becoming increasingly distracted during a pivotal phase of the company’s growth.

As Musk’s political ambitions grow, questions loom over Tesla’s strategic focus and its ability to stay ahead in an increasingly competitive global EV market. Whether the “America Party” gains political traction or not, it’s already leaving a mark—on Tesla’s valuation and on investor confidence.