Tesla shares drop after Elon Musk announces launch of America party

Tesla shares dropped sharply in premarket trading on Monday following CEO Elon Musk’s announcement that he plans to launch the America party.

The electric carmaker’s stock was down by 7.13% as of 4:27 a.m. E.T., shortly after Musk revealed over the weekend that the party would be called the “America Party.”

According to Musk, the political group would aim to influence a small number of key races, focusing “on just 2 or 3 Senate seats and 8 to 10 House districts.” 

He said this would be “enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people.”

The billionaire’s growing political ambitions have become a concern for some investors. Earlier this year, Musk was involved in the Department of Government Efficiency (DOGE) and worked closely with President Donald Trump — a move that was seen as potentially damaging to Tesla’s brand. His exit from DOGE in May had helped stabilise the company’s stock at the time.

According to CNBC, Musk’s re-entry into the political scene appears to be shaking investor confidence once again.

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“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,” Dan Ives, global head of technology research at Wedbush Securities, said in a note on 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.”

Musk’s initial political engagements earned him praise from Trump, but relations between the two have since soured. 

They have clashed over several policy issues, including the president’s spending bill, which Musk argues would increase the national debt. He has also criticised cuts to clean energy tax credits and support for electric vehicles.

Trump on Sunday described Musk’s move to form a political party as “ridiculous,” saying the Tesla boss had gone “completely off the rails.”

Beyond politics, Musk is also grappling with fresh business challenges. Tesla recently reported a 14% year-on-year drop in car deliveries for the second quarter, falling short of expectations amid intensifying competition — particularly in China, a key market for the company.

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