Musk's Political Plans Crash Tesla Stock

Tesla shares tumbled nearly 7% on Monday, wiping out more than $68 billion in market value after CEO Elon Musk revealed plans to establish a new political organization called the "America Party."

Speaking over the weekend, Musk double downed on his break from the Republican Party, outlining his vision for the new "America" party.

The announcement has reignited concerns among Tesla shareholders about Musk's political involvement, particularly following his controversial tenure with the Department of Government Efficiency (DOGE) earlier this year. Many investors viewed his DOGE role as potentially damaging to Tesla's brand image.

Dan Ives, global head of technology research at Wedbush Securities, captured the sentiment in a weekend note: "Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story."

Ives noted a growing sense of "exhaustion from many Tesla investors that Musk keeps heading down the political track," despite continued support from core Musk loyalists.

Trump's response to Musk's party announcement was swift and harsh, calling the move "ridiculous" and claiming the Tesla CEO had gone "completely off the rails."

The political drama compounds existing business pressures facing Tesla. The company recently reported a 14% year-over-year decline in second-quarter car deliveries, falling short of analyst expectations. Tesla also faces intensifying competition, particularly in China, one of its most important markets.

Tesla's stock closed Monday at $319.41, down 2.26 points or 0.70% from the previous session. The decline reflects broader investor anxiety about Musk's divided attention between his business empire and political ambitions.