Tesla shares fell sharply on Monday after CEO Elon Musk threatened to launch a new political party — renewing investor concerns following the mogul’s public dustup with President Trump.
Over the weekend, Musk touted plans for the “America Party” and suggested it could concentrate “on just 2 or 3 Senate seats and 8 to 10 House districts.”
He added this would be “enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people.”
Shares of the electric vehicle pioneer, which has been battered by Musk’s close ties and subsequent fallout with Trump, slid 6.8% to $293.94.
Trump called the latest idea “ridiculous.”
Musk’s latest move marks a re-entry into politics just months after resigning from his role as the de facto head of the Department of Government Efficiency, or DOGE, a Trump-backed initiative.
His departure from DOGE had buoyed Tesla’s stock, but the new political ambitions have rattled even his biggest supporters.
“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,” Tesla hawk Dan Ives, global head of technology research at Wedbush Securities, wrote in a note Sunday.
“While the core Musk supporters will back Musk at every turn no matter what, there is broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track.”
The Post has sought comment from Tesla.
Last week, Tesla posted a second straight drop in quarterly deliveries, pressuring its stock which has lost 35% since hitting a record high in December and is the worst performing among the “Magnificent Seven” this year.
“I and every other Tesla investor would prefer to be out of the business of politics. The sooner this distraction can be removed and Tesla gets back to actual business, the better,” said Camelthorn Investments adviser Shawn Campbell, who owns Tesla shares.
Tesla needs to deliver more than one million vehicles in the second half to avoid another decline in annual sales — a tall task due to tariff-driven economic uncertainty and backlash over Musk’s political stance.
The company is set to lose more than $80 billion in market valuation if current losses hold, while traders are set to make about $1.4 billion in paper profits from their short positions in Tesla shares on Monday.
Trump had threatened to cut off the billions of dollars in subsidies that Musk’s companies receive after their feud erupted into an all-out social media brawl in early June, wiping off $150 billion in Tesla’s market value in a single day.
Musk’s renewed attack on the Republican Party raises questions around Tesla board’s course of action. Its chair, Robyn Denholm, in May denied a Wall Street Journal report that said board members were looking to replace the CEO.
Investment firm Azoria Partners has delayed the listing of a Tesla exchange-traded fund, with CEO James Fishback calling for the board to evaluate if Musk’s political involvement is compatible with his obligations to Tesla as CEO.
“We pulled the Azoria Tesla Convexity ETF because we have real concerns about Elon’s ability to be a full-time CEO for Tesla with his new full-time job running ‘America Party’,” Fishback told Reuters on Monday.
Tesla’s board, which has been criticized for failing to provide oversight of its combative CEO, faces a dilemma managing him as he oversees five other companies and his political ambitions.
“This is exactly the kind of thing a board of directors would curtail – removing the CEO if he refused to curtail these kinds of activities,” said Ann Lipton, a professor at the University of Colorado Law School and an expert in business law.
The company’s shares and its future are seen as inextricably tied to Musk. He is Tesla’s single largest shareholder, according to LSEG data.
His stake should ideally not impact the board’s ability to look for potential replacements as it can choose to remove and appoint CEOs without putting in a shareholder vote, said Xu Jiang, a professor of business administration at Duke University’s Fuqua School of Business.
But such a move is highly unlikely considering the board has often defended Musk.
Denholm, handpicked by Musk, supported his record-breaking $56 billion compensation that was set in 2018, but it was rejected by a Delaware judge in January last year.
“The Tesla board has been fairly supine; they have not, at least not in any demonstrable way, taken any action to force Musk to limit his outside ventures, and it’s difficult to imagine they would begin now,” Lipton said.
Trump responded to Musk’s announcement of the America Party by calling it “ridiculous” and saying Musk had gone “completely off the rails.”
“I think it’s ridiculous to start a third party,” he told reporters before boarding Air Force One in Morristown, NJ.
“Starting a third party just adds to confusion. It really seems to have been developed for two parties. Third parties have never worked, so he can have fun with it, but I think it’s ridiculous.”
Shortly afterward, Trump doubled down on Truth Social, writing: “I am saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks.”
Musk’s push to form a third party was inspired in part by a user poll he posted on X, formerly Twitter, where a majority backed the idea.
In his announcement, Musk said the America Party aimed to “give you back your freedom” and push back against what he called a “one-party system” filled with “waste and graft.”
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While the party has not yet completed the legal steps to become a registered political entity, Musk has said its strategy would involve targeting a small number of congressional seats to exert disproportionate influence.
He cited historical military strategy as inspiration for focusing efforts where they can make the most impact.
Musk’s plans drew sharp responses from prominent MAGA figures.
Laura Loomer, a well-known right-wing influencer with close ties to Trump, warned that Musk’s third-party push could fracture the Republican base.
“I predict Tucker Carlson, Marjorie Taylor Greene and Thomas Massie will join the new ‘America Party’ to spite President Trump,” Loomer posted on X.
Raheem Kassam, a former adviser to Nigel Farage and influential voice in MAGA circles, threatened to abandon Musk’s platform if it began suppressing pro-Trump voices.
“If Musk weaponises X against Maga, I’m leaving this account as an automated news feed and shifting to TruthSocial tbh [to be honest],” Kassam wrote.
With Post wires
