Tesla’s stock is once again at the center of a high-stakes drama, but this time the twist comes not from a new vehicle launch or an AI breakthrough — it stems from Elon Musk’s latest political pivot. On Monday, the electric vehicle maker’s shares plunged nearly 7%, capping off a rough year where losses have already mounted to 27%. But the real story behind the decline is less about factory output and more about public perception, political ambition, and an increasingly personal feud with former President Donald Trump.
It started with a single post. Over the weekend, Musk took to X, the platform he owns and actively uses as a megaphone, to announce the formation of the "America Party." While political speculation around Musk has long circulated in tech and political circles, few expected him to commit to launching a formal third party. Yet a poll posted to X on July 4, asking whether Musk should “start something new,” returned a strong 65% yes vote — a result he used as the public justification for his declaration. What followed was predictable in its unpredictability.
Trump responded within hours on his Truth Social platform, lambasting the idea of a third party and accusing Musk of “going off the rails.” The former president's words were not just critique — they were a dismissal. After all, Musk had once stood alongside Trump as a key advisor in the controversial Department of Government Efficiency, or DOGE, which aimed to cut federal spending with corporate-style measures. That alliance has now curdled into an open rivalry, fueled by clashing egos and diverging political strategies.
Investors, understandably, are skittish. Tesla has long been viewed not only as a car company but as a reflection of Musk’s vision and leadership. When he’s focused, the company has soared — just look at the period following the Model 3’s ramp-up or the debut of the Cybertruck. But when distractions mount, the stock tends to follow his headlines rather than his balance sheets. Many retail investors who bought into Tesla during its heyday remember the thrill of watching it rise through pandemic-era optimism. Now, with Musk shifting from boardrooms to campaign slogans, they’re watching in dismay.
A longtime Tesla shareholder from San Diego shared how conflicted he felt as he refreshed his trading app. “I bought this stock because I believed in electrification, in innovation,” he said. “Now it feels like I’m watching a political campaign every time I check my portfolio.” That tension — between mission and personality — is becoming harder to ignore 📉
At the core of the issue is a very real concern about leadership bandwidth. Musk already juggles responsibilities at Tesla, SpaceX, Neuralink, and X. His talent for multitasking is legendary, but even legends have limits. The idea of starting and leading a political movement — especially one intended to disrupt the two-party system — would demand enormous time, energy, and attention. And for a publicly traded company like Tesla, where shareholder value is tied closely to CEO performance, this spells risk.
Adding fuel to the fire is the economic backdrop. Tesla’s global sales have been softening, with China and Europe reporting year-over-year declines amid increased competition from local EV makers. At home, things have grown even tougher. The recent budget signed by President Trump — dubbed the “One Big Beautiful Bill” — has removed federal tax credits for EVs that aren’t manufactured entirely in the United States with American-sourced components. Tesla, with its global supply chain, has been hit hard by this move. Some buyers have seen their total cost of ownership for a new Model Y jump by thousands of dollars overnight. That, combined with high interest rates, has made new EV purchases a tougher sell 🚗💸
There’s also the branding issue. Tesla is no longer just a car company — it’s a brand loaded with symbolism, and Musk’s every move reflects on it. A political party with the name “America Party” might seem benign or even patriotic, but for many, it conjures fears of polarization and distraction. One EV dealership employee in Texas noted that several customers asked pointed questions this week about Musk’s “politics” before finalizing their orders. “They used to ask about range or charging stations,” she said. “Now they want to know if buying a Tesla makes a political statement.”
Meanwhile, inside Tesla, the mood has reportedly grown tense. While the company has not released an official statement about Musk’s political aspirations, internal chatter suggests that some executives are growing frustrated. “We joined to build something world-changing, not to support a political campaign,” said one engineer who has worked at Tesla since 2018. Morale may not be tanking, but the uncertainty is palpable. Employees thrive on mission clarity, and right now, things feel anything but clear 🔋🌀
Historically, markets have shown that they dislike unpredictability, especially when it comes from the C-suite. Whether it’s a sudden leadership departure, a surprise acquisition, or a foray into politics, investors crave stability. When a company’s identity becomes inseparable from its CEO — and when that CEO courts controversy — the result is volatility. Tesla has weathered this before, during Musk’s tussles with the SEC and his infamous “funding secured” tweet. But this moment feels different. It's not just about Musk acting out — it’s about him actively building something that could pull him even further away from his corporate responsibilities.
For longtime observers of Musk, this political move may not come as a shock. His commentary on national policy, free speech, and government overreach has been intensifying for years. But formalizing those opinions into a political movement, complete with an organizational structure, fundraising, and likely debates, represents a new frontier. And while it may energize some of his most loyal followers, it could alienate others — particularly those who invested in Tesla for its technology, not its CEO’s ideology.
As the dust settles from this latest episode, one thing is clear: Tesla is entering a new chapter. Whether that chapter brings renewed focus or continued distraction remains to be seen. But for now, shareholders are left watching not just the market, but the news cycle, trying to make sense of where their investment — and its mercurial leader — is heading next.📊🗳️