Tesla shares drop nearly 7% after Musk launches ‘America Party’
3 Min Read
Elon Musk's launch of the America Party escalated tensions with Trump, raising investor concerns over Tesla’s exposure to political risk.
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People walk past a Model Y at the Tesla stand at the Vivatech fair, one of Europe's biggest technology industry fairs, on June 11, 2025, in Paris. (AP)
Tesla shares tumbled nearly 7% in pre-market trading on Monday following CEO Elon Musk’s surprise announcement of a new political party in the United States. According to trading data, Tesla stock was down 6.62%, trading at $294.47 as of 09:26 GMT (local time).
The market downturn came just two days after Musk publicly unveiled the formation of the “America Party”, a political entity he claims is designed to counter what he called the US’s descent into a “one-party system.”
The move marks a dramatic new chapter in Musk’s growing rift with US President Donald Trump and the Republican establishment.
Political ambitions spook investors
Musk had previously teased the idea of launching a third party in late June but made it official over the weekend, submitting paperwork to register the America Party (AMEP) with US authorities. That said, the filing is currently pending review.
The announcement immediately triggered market jitters, with analysts warning that Musk’s deepening political involvement could pose reputational and regulatory risks for Tesla, particularly in a volatile pre-election environment.
The announcement also escalated tensions with Trump, who responded sharply via Truth Social, suggesting Musk may have to "close up shop and head back home to South Africa" if he continues down this political path. Trump later dismissed the new party as "ridiculous."
The clash unfolds amid heated debate over a proposed federal spending bill that combines deep budget cuts with broad tax breaks, policies that Musk has publicly criticized.
Rising political entanglements
Musk’s announcement of the America Party follows a string of politically charged moves, including clashes with regulators, public feuds with high-profile politicians, and controversial commentary on US governance and media.
With regulatory scrutiny already mounting around Tesla’s labor practices and AI ambitions, investors appear concerned that Musk’s political aspirations could further distract from the company’s core business and expose it to additional instability.
As of now, it remains unclear how far Musk intends to take his new political venture. But for markets, the message was immediate: politics and Tesla don’t mix well.
Read more: Tesla starts 2025 with sharp drop in sales in Europe: FT
