Tesla Stock Slides After Trump Slams Musk’s Political Party Plans

Tesla Shares Drop as Trump Blasts Elon Musk’s New Political Party

Tesla stock fell sharply in premarket trading Monday following a dramatic public clash between CEO Elon Musk and former President Donald Trump. The electric vehicle giant’s shares were down as much as 7.6% before the opening bell, recovering slightly to a 6.5% drop by 7:48 a.m. ET.

The sell-off came just hours after Musk announced the launch of a new political group called the "America Party" — a direct challenge to the dominant Democratic and Republican parties. The move drew an immediate rebuke from Trump, who took to his Truth Social platform Sunday night to call Musk “a train wreck” and his new party “ridiculous.”

“Third parties have never succeeded in the U.S.,” Trump posted. “All they do is create complete and total disruption and chaos.”

Musk, who has repeatedly criticized government spending and bureaucracy, said Saturday that the new party is aimed at returning “freedom” to the American people and challenging what he called a “one-party system.”

The timing of the announcement has rattled Tesla investors, already uneasy over the company's recent performance and Musk’s ongoing political entanglements.

Investor Concerns Over Distraction and Policy Risk

Analysts pointed to two main investor concerns: the potential loss of government support for electric vehicles and worries that Musk may be increasingly distracted from Tesla’s operations.

“Investors had welcomed Musk’s decision to reduce his political exposure, but this move puts him right back in the spotlight,” said Neil Wilson, a strategist at Saxo Markets. “There’s concern that this could lead to reduced EV subsidies and that Musk won’t be as focused on Tesla’s turnaround.”

Those fears are not unfounded. Earlier this year, Musk briefly served as the head of the Department of Government Efficiency under the Trump administration before stepping down amid controversy and protests. The overlap between his political activism and business leadership has been a recurring concern among shareholders.

Tesla Faces Declining Sales, Stiff Competition

The political turbulence adds to a difficult financial year for Tesla. The company recently reported a record 13.5% drop in second-quarter deliveries, and 2024 marked its first-ever annual sales decline as a public company.

Competition is also heating up globally. Chinese rival BYD is on track to surpass Tesla in total annual EV sales, even though BYD has yet to enter the U.S. market.

Tesla’s global brand is also under pressure. Protests have broken out near Tesla showrooms in Europe and the U.S., fueled by criticism over Musk’s political appointments and his controversial views on regulation and labor.

Market Response and Outlook

Despite strong performance in its energy and AI ventures, Tesla’s stock has struggled in 2025, down nearly 23% year-to-date. While some investors had hoped Musk would shift focus back to core businesses like Tesla and SpaceX after stepping down from his short-lived government role in May, the new political party suggests a renewed public campaign may lie ahead.

The company is scheduled to report its Q2 earnings later this month, with analysts closely watching for signs of operational recovery — and reassurances that Musk’s attention will remain fixed on Tesla’s future, not his own political ambitions.