Tesla (TSLA) Shares Fall 7% After Musk Launches Political Party

Tesla (TSLA, Financials) shares dropped sharply early Monday after CEO Elon Musk revealed plans to form a new political party, renewing investor concerns about distractions from the company's core business.

The stock declined to $291.00 in premarket trade, down 7.13% by 4:27 a.m. E.T., after Musk said the America Party would focus on a few strategic congressional seats to influence national legislation.

Musk previously joined the Trump administration's Department of Government Efficiency, a move widely criticized by shareholders. His exit in May helped stabilize Tesla's stock. But his re-entry into politics has rekindled concerns.

Dan Ives, global head of tech research at Wedbush Securities, said Sunday the decision was exactly the opposite direction investors want Musk to take during this critical period for the company.

There is broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track, Ives wrote in a note.

The development also deepens tensions with President Donald Trump, who called Musk's new political initiative ridiculous and said the Tesla chief had gone completely off the rails.

Investors have additional worries beyond politics. Tesla reported a 14% year-on-year decline in vehicle deliveries in Q2 2025, falling short of expectations. The automaker is facing increased competition, particularly in China.