Tesla shares came under fresh pressure on Monday after CEO Elon Musk announced plans to launch a new US political party, raising concerns among investors about his focus on the electric vehicle maker as he intensifies his public feud with President Donald Trump. According to Reuters, Tesla’s stock dropped more than 6 per cent in Frankfurt trading, setting the stage for further losses in US markets after the Independence Day holiday.
Musk’s political pivot raises investor alarms
Musk’s announcement that he intends to form the “America Party” marked a new escalation in his increasingly combative relationship with Trump, who swiftly dismissed the idea as “ridiculous.” The move has amplified investor fears that Musk’s attention could be diverted away from Tesla’s business challenges at a critical moment for the company.
Veteran technology analyst Dan Ives of Wedbush described Musk as Tesla’s “biggest asset” but warned that wading further into politics risked undermining investor confidence. “Tesla needs Musk as CEO and its biggest asset and not heading down the political route yet again… while at the same time getting on Trump’s bad side,” Ives said in a note, as quoted by Reuters.
Trump lashes out at Musk over new party
The latest spat between Trump and Musk comes after years of an on-again, off-again relationship. While Musk has benefited from government contracts, particularly through SpaceX, the US president slammed Musk’s political ambitions on Sunday. Trump argued that Musk’s plan to form a new party created a conflict of interest, referencing his previous decision to nominate a Musk ally to lead NASA.
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As per Reuters, Trump’s criticisms signal rising political tension at a time when Musk is facing questions about Tesla’s growth prospects, competition in the EV sector and broader economic uncertainty.
Analysts see risks for Tesla’s board
Ives warned that Tesla’s board might eventually need to intervene if Musk’s political activities become a significant distraction or source of controversy for the company.
“It would also not shock us if the Tesla board gets involved at some point given the political nature of this endeavour depending on how far Musk takes it,” Ives added, according to Reuters.
Investors are watching closely to see how Musk balances his leadership role at Tesla with his increasingly vocal political activity.
Shares under pressure ahead of US trading
Tesla’s decline in Frankfurt trading suggests investors are bracing for further weakness when US markets reopen after the holiday.
As Musk’s political plans take shape, analysts say the key question is whether his focus will remain on steering Tesla through a competitive EV market and ongoing challenges with margins, production costs and global demand.
(With inputs from the agencies)