Tesla’s stock fell more than 3% in early trading Monday as investors reacted to CEO Elon Musk’s announcement of plans to form a new U.S. political party, intensifying his public feud with former President Donald Trump. The dip followed a three-day holiday weekend, with premarket indicators suggesting continued pressure on the electric vehicle maker’s shares.
Wall Street analysts expressed concern over Musk’s deepening political involvement, with Wedbush’s Dan Ives warning that Tesla “needs Musk as CEO and its biggest asset—not heading down the political route.” Ives noted the added risk of Musk alienating Trump supporters, a key demographic for Tesla’s consumer base, and suggested Tesla’s board might intervene if the political venture escalates.
The tension between the two billionaires escalated Sunday when Trump dismissed Musk’s proposed “America Party” as “ridiculous,” while also criticizing Musk’s space industry ties. The public spat comes at a sensitive time for Tesla, which faces softening EV demand and increased competition.
Market observers are now watching whether Musk’s political ambitions could further divert his attention from Tesla, which recently reported its first year-over-year quarterly sales decline since 2020. The stock slide reflects growing unease among investors about leadership focus as the company navigates critical challenges in auto production and AI development.