7 Shocking Reasons Tesla Stock Is Falling After Elon Musk’s Political Party Announcement
Tesla stock (TSLA) is making headlines again—and not for its vehicles. On Monday, Tesla shares plunged by as much as 7.6% in premarket trading following Elon Musk’s announcement of a new American political party, a move that has already ignited a political firestorm with former U.S. President Donald Trump.
This development has rattled markets and triggered deep concerns among Tesla investors, who fear Musk is drifting away from the wheel of the EV giant just when it needs him most. Here’s a detailed look at seven shocking reasons why Tesla’s stock is crashing and what it means for the future.
1. A Surprise Political Bombshell
The announcement of the “America Party” on Musk’s platform X took investors by surprise. Political involvement at this scale isn’t new for Musk, but creating an entirely new party is a step further, raising fears that his attention is straying far from Tesla’s business goals.
2. Public Clash With Donald Trump
The timing couldn’t be worse. Trump labeled Musk’s move “ridiculous” and warned it would cause “Complete and Total DISRUPTION & CHAOS.” The very public war of words has injected political volatility into Tesla’s future, particularly given Trump’s influence on policy and regulation.
3. Investor Distrust and Distraction Fears
According to Neil Wilson of Saxo Markets, investors had initially cheered Musk’s decision to step away from frontline politics. Now, with this new turn, they’re worried. Will Musk stay focused on Tesla, or will he dive deeper into politics?
4. Concerns Over EV Subsidies
As the feud deepens, so do investor worries that Tesla may lose government support, especially key EV subsidies under federal programs. Political backlash could lead to stricter policies or reduced incentives.
5. Tesla’s Sales Are Declining
Last week, Tesla reported a record 13.5% drop in Q2 2025 sales and its first annual sales decline in history. These numbers are alarming, especially in an increasingly competitive EV landscape dominated by emerging players like China’s BYD.
6. Global Backlash and Protests
Musk’s controversial leadership of the Department of Government Efficiency—which included mass federal layoffs—sparked global protests at Tesla showrooms. This public perception crisis is impacting brand loyalty and sales.
7. Stock Performance Already Weak in 2025
Before this latest drama, Tesla stock had already lost 23% year-to-date. The recent political tension only worsens the market sentiment, pushing some institutional investors to reconsider their positions.
Final Thoughts:
Tesla is no stranger to controversy, but 2025 may be its most turbulent year yet. As Elon Musk throws himself into the political arena, investors are rightfully asking: Who’s really driving Tesla right now?
Whether you’re a Tesla fan, investor, or simply watching from the sidelines, the relationship between politics and business has never been this electrifying.
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