Tesla shares slide nearly 7% after Musk launches new political move with America Party

Tesla's stock price dropped 7% on Monday morning after CEO Elon Musk announced he was starting a new political party on X, according to CBS News who reported on the market reaction. The electric car company's shares fell to $293 each as investors worried about Musk's latest political move. The tech billionaire called his new group the “America Party” and said it would give people back their freedom. 

CBS News noted that Musk plans to focus on winning just a few key elections, targeting 2 or 3 Senate seats and 8 to 10 House districts where Republicans currently have very slim majorities. President Trump fired back on Sunday, calling Musk a train wreck who had gone completely off the rails. Musk has not shared specific details about how he will actually create this new political party, which requires following complex rules in each state and at the federal level.

The billionaire's political plans come at a bad time for Tesla, as USA Today highlighted the company's recent struggles with sales and Trump's harsh criticism. Musk, who is worth $405 billion according to Forbes, spent nearly $290 million helping Trump and other Republicans get elected. He had been leading efforts to cut government spending through the Department of Government Efficiency during Trump's presidency.

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The two men have been fighting over Trump's Big Beautiful Bill, which includes tax cuts, more spending on immigration and the military, but also deep cuts to Medicaid. USA Today reported that this legislation will increase the national debt by $3.4 trillion, which Musk strongly opposes. The spending bill also raises the debt ceiling by $5 trillion. Musk has threatened to support primary challengers against lawmakers who voted for the bill, saying those who campaigned on reducing spending but then voted for the biggest debt increase in history should be ashamed. Before this latest fight, Musk had tried to fix his relationship with Trump, even personally apologizing for insults he made when leaving the administration last month.

Tesla investors are clearly unhappy with Musk's return to politics, as the New York Times documented through the company's falling stock prices. When Musk asked his followers on social media whether it was time to create a new political party, 80% said yes, but Wall Street strongly disagrees. Tesla shares have dropped 40% from their highest point in December, showing how much investors dislike Musk's political activities. His support for Trump's campaign was once seen as good for Tesla, helping drive up the stock price after the election. However, this relationship has now become a problem for the company. The New York Times pointed out that Musk's backing of Trump and far-right politicians in Europe has turned away liberal customers who are most likely to buy electric cars.

This has contributed to falling sales, with Tesla delivering 384,000 vehicles in the second quarter, down 14% from the same period last year. The chances of Musk and Trump making up seem very small after Trump called Musk a train wreck on Truth Social. Musk responded by reposting Trump's comments on his social media platform X without adding any response of his own.