Tesla shares slid more than 3% on Monday as investors reacted nervously to CEO Elon Musk’s surprise announcement of a new U.S. political party — a move seen as a sharp escalation in his ongoing rift with President Donald Trump.
The dip, first seen in Frankfurt trading during the U.S. holiday weekend, signals potential further losses once U.S. markets reopen following the Independence Day break. According to Reuters, the stock’s decline reflects mounting concerns over Musk’s growing political involvement, which some fear could distract from his role as the driving force behind Tesla’s global operations.
Veteran tech analyst Dan Ives of Wedbush weighed in, calling Musk both Tesla’s “biggest asset” and the person who needs to stay focused on the company’s core business — not politics.
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“Tesla needs Musk as CEO and not heading down the political route yet again, especially while getting on Trump’s bad side,” Ives wrote in a Sunday note. “It would also not shock us if the Tesla board gets involved at some point, given the political nature of this endeavor and how far Musk might take it.”
Musk’s decision to launch the so-called America Party marks a new and highly public step into the political arena. It also appears to have drawn immediate backlash from former ally President Trump, who on Sunday dismissed the idea as “ridiculous.”
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The president also raised ethical questions, referencing a past Musk appointee to lead NASA — suggesting that such a move would have posed a conflict of interest due to Musk’s heavy involvement in space through SpaceX.
The timing of Musk’s announcement, as Tesla navigates increased competition, a volatile EV market, and evolving AI ambitions, has only deepened investor anxiety. While Musk has long been known for his unconventional leadership style and outspoken public persona, shareholders may now be wondering whether his latest political foray will come at the expense of Tesla’s strategic focus.
As Wall Street waits to see how deeply Musk dives into his new political venture, Tesla’s board may soon face renewed pressure to keep the CEO centered on steering one of the world’s most valuable car companies through increasingly choppy waters.
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