Tesla’s stock price fell by around 7% on Monday, following CEO Elon Musk‘s announcement over the weekend of his new political initiative, the “America Party.” The announcement has stirred up political tensions, particularly with US President Donald Trump, who criticized Musk’s move to challenge the country’s entrenched two-party system.
Musk’s Political Move Sparks Market Concerns
Musk revealed his intention to start the America Party after a poll conducted on his social media platform, X, showed significant support for a third political party. Musk claimed the poll results indicated a 2-to-1 preference among Americans for this new political venture. In a statement on X, he said, “When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy. Today, the America Party is formed to give you back your freedom.”
However, the news did not sit well with investors, who feared potential repercussions for Tesla’s brand. By noon on Monday, Tesla’s stock had dropped by 7.6%, erasing approximately $15 billion from the company’s market capitalization. By the close of trading on the NASDAQ stock exchange, Tesla shares were down $21.41 or 6.79%, settling at $293.94.
Political Tensions and Financial Impact
President Trump was quick to denounce the idea of a third party, posting on Truth Social, “The one thing Third Parties are good for is the creation of Complete and Total DISRUPTION & CHAOS.” He further elaborated his stance to reporters, stating, “It’s ridiculous to start a third party. We have tremendous success with the Republican Party.” Trump has also accused Musk of opposing the administration’s spending bill because it would end federal subsidies for Tesla, though Musk has previously urged the government to cut these tax credits for electric vehicles.
Adding to the financial strain, Tesla reported nearly 14% fewer deliveries in the second quarter of this year. This marks the company’s worst sales performance since 2022, with two consecutive quarterly declines in vehicle deliveries in 2025. The company has faced protests and controversy regarding Musk’s previous involvement with the Trump administration and the Department of Government Efficiency (DOGE).
Musk’s public feud with Trump intensified after Musk’s criticism of the One Big Beautiful Bill, signed into law on July 4, which is estimated to add about $3.4 trillion to the US national deficit over the next decade. The Congressional Budget Office provided these estimates, although the Trump administration disputes them, claiming they do not account for economic growth anticipated under the new legislation.
Beyond Tesla, Musk’s roles as the head of SpaceX, The Boring Company, Starlink, Neuralink, and xAI position him at the center of significant US innovation and defense contracting. With SpaceX being a major defense contractor, Musk’s statements that SpaceX would decommission the Dragon spacecraft in response to political pressure further complicate the scenario.
The unfolding events highlight the intricate interplay between business and politics, with Musk’s actions potentially reshaping the landscape for both Tesla and broader US political discourse.
