Tesla slides 7% as Musk's 'America Party' reignites investor angst

Tesla shares fell nearly 7% in premarket trading on Monday, after CEO Elon Musk's plans to launch a new US political party reignited investor concerns about his commitment to the electric-vehicle maker's future.

Musk, the former head of the Department of Government Efficiency (DOGE), unveiled the 'America Party' on Saturday, voicing his displeasure over President Donald Trump's 'One Big, Beautiful Bill'.

Musk's move marks a fresh escalation in his feud with Trump and comes close on the heels of Tesla posting a second straight drop in deliveries, further denting investor confidence in the stock that has lost more than 21% so far this year.


Trump and Musk's relationship erupted into an all-out social media brawl early June over the tax bill, with the U.S. president threatening to cut Musk's government contracts and subsidies.

"Investors are worried about two things - one is more Trump ire affecting subsidies and the other, more importantly, is a distracted Musk," said Neil Wilson, UK investor strategist at Saxo Markets.

Musk, who spent nearly $300 million backing Trump and other Republicans last year, said in May he would scale back political spending and remain Tesla CEO for another five years, aiming to ease investor concerns over his focus and government ties.

"Investors had cheered Musk stepping back from frontline politics but are now worried he's going to (get) sucked back in and take his eye off Tesla," Wilson added.

The first signs of investor unease surfaced soon after Musk's announcement, with investment firm Azoria Partners delaying the listing of a Tesla exchange-traded fund, Azoria CEO James Fishback said in a post on X.

Trump on Sunday called Musk's plans to form the "America Party" "ridiculous," saying the Musk ally he once named to lead NASA would have presented a conflict of interest given Musk's business interests in space.

Wedbush analyst Dan Ives, a Tesla bull, said many of the company's investors are feeling a "sense of exhaustion" over Musk's insistence on immersing himself in politics.

Tensions with Trump, struggling sales and an aging vehicle line-up have weighed heavily on Tesla's stock, even as the company bets on growth from autonomous vehicles.

The stock, which soared to over $488 in December after Trump's November re-election, has lost 35% since then and closed last week at $315.35.