Tesla shares dropped 7% in premarket trading following CEO Elon Musk’s announcement of plans to launch a new political party, a move that has sparked fresh concern among investors over his growing political involvement.
Over the weekend, Musk revealed via social media his intention to establish the “America Party,” a group he says could strategically target “just 2 or 3 Senate seats and 8 to 10 House districts” to wield decisive influence in Congress. According to Musk, this would allow the party to “serve as the deciding vote on contentious laws, ensuring they serve the true will of the people.”
The timing of Musk’s political venture has raised eyebrows on Wall Street, as Tesla continues to face significant business challenges—including a 14% year-over-year drop in vehicle deliveries during the second quarter and rising competition, particularly in China, a vital market for the company.
Analysts warn that Musk’s deeper dive into politics could further distract him from navigating Tesla through these headwinds.
“Elon diving deeper into the political arena—especially during such a pivotal period for Tesla—is exactly what investors do not want,” said Dan Ives, Wedbush Securities’ head of tech research, in a Sunday note. “Many shareholders are experiencing fatigue from his constant political entanglements.”
Musk’s political activity has long been a polarizing issue. Earlier this year, he joined former President Donald Trump’s so-called Department of Government Efficiency (DOGE), only to withdraw in May amid growing scrutiny. That exit had briefly reassured investors, but his latest move has reignited fears of brand damage—especially among environmentally conscious consumers.
His once-warm relationship with Trump has also cooled. While the former president initially praised Musk, their rapport has soured over disagreements on federal spending, clean energy incentives, and tax credits crucial to Tesla’s EV business. In a statement Sunday, Trump slammed Musk’s political ambitions as “ridiculous” and claimed the tech billionaire had gone “completely off the rails.”
With Tesla struggling to maintain momentum amid tightening global competition and operational hurdles, many industry watchers say Musk’s focus should remain firmly on the company, not Capitol Hill.
“Tesla needs stable leadership more than ever,” said one analyst. “Now is not the time for side ventures—especially ones as divisive and unpredictable as launching a political party.”
