Elon Musk’s Political Party Reveal Sends Tesla Shares Crashing 7%— What’s Going On?

The shares of electric vehicle (EV) major Tesla Ltd. declined as much as 7 per cent in pre-market trading on Monday, July 7, after its CEO Elon Musk launched a new political party last weekend.

After 65 per cent users on "X" voted in favour of his query on should he launch a new political party. Musk announced the formation of the "America Party", which expects "to give back your freedom."

This raised fresh investor concerns over Musk's move extended his feud with US President Donald Trump.

Veteran tech analyst Dan Ives of Wedbush said Musk was Tesla's "biggest asset" and his decision to dive deeper into politics would likely put the company's shares under pressure, according to a Reuters report. 

Also Read: Who Is Vaibhav Taneja? Elon Musk’s Cashman For ‘America Party’

"Tesla needs Musk as CEO and its biggest asset and not heading down the political route yet again...while at the same time getting on Trump's bad side," Ives said in a note on Sunday.

Musk has been a vocal critic of the 'One Big Beautiful Bill' over concerns that it nullifies all the work that his Department of Government Efficiency (DOGE) had done in the initial months of the Trump administration.

Tesla's shares were under pressure after its public image downgraded post Musk's involvement with the Trump government and shareholders had warned him to return to the business. Shares recovered after Musk called time on his DOGE stint and announced that he will focus his attention on running his businesses from Space X to Tesla.

Musk said over the weekend that the party would be called the “America Party” and could focus “on just 2 or 3 Senate seats and 8 to 10 House districts.”

The intent being that it would be “enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people.”

Retaliating to Musk's political venture, Trump dubbed the move as "ridiculous" and mentioned that the Tesla founder was “completely off the rails.”

Tesla's car deliveries during the quarter declined by 14% on a year-on-year basis. It is facing tough competition from other car manufacturers, like BYD, whose sales in recent times have regularly outperformed Tesla.

The shares of Tesla are still down 17 per cent so far in this year.