Tesla stock plummets as Elon sparks chaos with new party challenge

Elon Musk's Political Ambitions Spark Concern Among Tesla Investors

Elon Musk, the CEO of Tesla, has faced a setback in pre-market trading as investors express concerns over his recent political endeavors. One investor described Musk’s decision to launch a new political party as "the opposite" of what shareholders want. This move comes after Musk, the former head of the Department of Government Efficiency (DOGE), announced the formation of the America Party on Saturday. His motivation stems from dissatisfaction with Donald Trump’s "One Big, Beautiful Bill," which he claims will lead the country into bankruptcy.

Musk's America Party aims to unite "the 80 percent" of Americans in the center against the two major parties. However, this announcement has caused a drop in Tesla's stock by 2.6 percent in pre-market trading. This follows a 22 percent decline in Tesla's stock value for 2025 alone, highlighting the impact of Musk's growing political involvement.

Investor Reactions and Analyst Perspectives

Dan Ives, an analyst known for his optimism about Tesla, expressed concerns that Musk is diverting attention from his primary responsibilities at Tesla. He stated that Musk's deepening involvement in politics contradicts the direction most Tesla investors prefer during this critical period for the company. Ives noted that while investors understand Musk's motivations, they are exhausted by the constant political maneuvering.

Business Insider reported that Ives warned Musk could be creating a powerful enemy for Tesla in Trump. He emphasized that Musk and Tesla do not need to provoke Trump, as he could create more obstacles for the company in the future. Ives also mentioned that the relief investors felt when Musk left the Trump administration was short-lived, as the latest announcement has taken a turn for the worse.

Trump's Response and Musk's Counterattack

On Sunday, Trump responded to Musk's America Party, stating it would "never work." He criticized Musk for challenging the two-party system and accused him of going "completely off the rails." Trump, who ran for president on the Reform Party ticket in 2000, argued that third parties have never succeeded in the United States and that the two-party system has been effective.

Musk indirectly responded on social media, questioning the purpose of the DOGE if Trump was going to increase the national debt by $5 trillion. He quoted from the novel Dune, writing, "Fear is the mind-killer. Fear is the little death that brings total obliteration."

Musk's Criticism of Trump's Legislation

Musk was furious with the legislation passed by Congress, which did not include federal subsidies for electric vehicles and added to the country's debt. During his time at the Department of Government Efficiency, Musk worked to reduce the size and scope of the federal government. However, Trump claimed Musk knew from the start that he wouldn't receive subsidies.

As lawmakers debated Trump's legislation, Musk repeatedly threatened them with primaries and vowed to start his own political movement. The bill passed last week and was signed into law on the Fourth of July.

Impact on Future Elections

Musk's potential influence on the 2026 midterm elections remains uncertain. While he could impact the outcome by spending significant amounts of money, starting a third party presents challenges. Each state has different requirements for ballot access, and heavily gerrymandered districts may make it difficult for a third-party candidate to gain traction.

Republicans currently hold slim majorities in both the House and Senate. Out of 100 seats in the U.S. Senate, 53 are held by Republicans, and in the U.S. House of Representatives, 220 seats are held by Republicans, with 212 by Democrats. The margins could shift with a few strategic victories.

Musk spent Sunday morning on X gathering feedback from users about the America Party and indicated he would use it in next year's contests. He also vented his frustration with Republicans, criticizing their actions despite holding control of all branches of government. Musk vowed to challenge the existing political system, drawing a historical analogy to how Epaminondas shattered the myth of Spartan invincibility at Leuctra.