Tesla Shares Drop as Elon Musk Plans to Launch Own Political Party

Tesla shares plunged nearly 7% following the announcement by CEO Elon Musk of his intention to establish a new political party named the America Party, stirring investor concerns about potential distractions from Tesla’s operations.

Musk revealed his plans during a dispute with President Trump over a recent spending bill, marking a further divergence in their once-close relationship.

Musk criticised the existing political system for its waste, claiming the America Party would offer renewed freedom. This political involvement, however, has disturbed some investors who fear it detracts from his attention to Tesla’s performance.

As Musk became more ingrained in politics, Tesla’s stock has seen a more than 22% decline this year. Investors were initially relieved when Musk resigned from his governmental role in May, but ongoing friction with Trump continues to tarnished Tesla’s reputation.

Musk’s liberal-leaning customer base has criticised Tesla’s brand following his White House tenure, causing a drop in the resale value of used Teslas and signaling potential dwindling demand.

Wedbush Securities analyst Dan Ives estimates that up to 10% of the reputational damage experienced during Musk’s political stint may be irreversible. This impact extends globally, with a nearly 50% drop in European sales across 32 countries in April.

“Tesla shareholders are weary,” said Ives in an interview. “They need Musk to prioritize Tesla over politics.”

Tesla shares closed on Monday at $293, down 6.7%.