Tesla Shares Tumble as Trump Dismisses Elon Musk’s Political Party and Sparks Investor Concerns
London — Tesla stock took a major hit on Monday, dropping by as much as 7.6% in premarket trading after CEO Elon Musk announced plans to launch a new political entity—the America Party—prompting a furious backlash from former U.S. President Donald Trump.
Musk's Saturday announcement that he was forming a political party to challenge Republicans and Democrats set off political and market turmoil. Trump's sharp response came Sunday on his social media platform Truth Social, where he wrote:
“I’m saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks.”
Trump went further while speaking to reporters before boarding Air Force One in New Jersey, calling Musk's political venture “ridiculous” and warning it would only “sow confusion” in a country built around a two-party system.
The market responded swiftly. Tesla (TSLA) stock opened Monday trading down 7.6%, marking its worst single-day performance since June 5, when Musk and Trump previously exchanged heated words online.
Investor Worries Multiply
According to analysts at Saxo Markets, investors are increasingly concerned about Musk being distracted from core business operations at Tesla, especially amid ongoing economic pressures and fierce competition in the EV space.
“Investors had cheered Musk stepping back from frontline politics,” said strategist Neil Wilson. “Now, they worry he’s being sucked back in, diverting focus from Tesla.”
Tesla has recently reported its first-ever annual sales decline, with Q2 2025 sales dropping 13.5% year-over-year. The company is also on the verge of losing its position as the world’s top EV maker to China’s BYD.
Adding to investor unease, Musk’s past involvement in U.S. government affairs—including a brief stint heading the Department of Government Efficiency and implementing sweeping federal layoffs—sparked global protests, some of which targeted Tesla showrooms.
Trump Threatens Contracts, Rebukes NASA Pick
Trump’s post also criticized Musk’s influence within federal agencies, including NASA. The former president confirmed he had rescinded the nomination of Jared Isaacman, a Musk ally and private astronaut, to lead the space agency due to potential conflicts of interest.
“It’s inappropriate to put Elon’s close friend in charge of NASA, considering the scale of his business with them,” Trump said on Truth Social.
Trump further warned he could pull billions in federal subsidies and contracts from Tesla and SpaceX in retaliation for Musk’s public criticism of his “Big, Beautiful Bill”—a tax and spending bill Musk claims will “bankrupt” the country.
Political Fallout Disrupts Markets
Musk, who previously supported Trump’s 2024 campaign financially and made frequent White House visits, has now become one of the former president’s most vocal critics. His formation of the America Party aims to unseat lawmakers who supported the controversial bill.
As the political fallout continues, Azoria Partners announced it is postponing the launch of its Tesla Convexity ETF, citing the conflict between Musk’s political ambitions and his role as Tesla CEO.
“The Board must evaluate whether Musk’s new political role is compatible with full-time leadership of Tesla,” said Azoria CEO James Fishback.
With Tesla stock now down more than 35% from its December peak, analysts say investor sentiment will largely depend on whether Musk can refocus on Tesla’s core mission—or whether politics will continue to dominate headlines.
