Tesla (TSLA) Stock Tumbles 7% as Musk-Trump Feud Escalates Over New Political Party, EV Credit Fears
Shares of Tesla (TSLA) dropped sharply in Monday trading, falling over 7% as a renewed public conflict between CEO Elon Musk and President Trump rattled investors. The dispute centers on Musk’s announcement of a new political party and growing Wall Street concerns about the potential loss of electric vehicle (EV) incentives under Trump’s proposed “One Big Beautiful Bill.”
The latest chapter in the saga unfolded over the weekend when Musk polled his followers on X about creating an independent political party. Following the poll, Musk declared the formation of the “American Party,” stating his goal was to challenge the political status quo and address the national deficit.
“By a factor of 2 to 1, you want a new political party and you shall have it!” Musk posted. “Today, the America Party is formed to give you back your freedom.”
The move drew a swift and critical response from President Trump on his Truth Social platform, who dismissed Musk’s political ambitions.
“I am saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks,” Trump wrote. “He even wants to start a Third Political Party, despite the fact that they have never succeeded in the United States – The System seems not designed for them.”
The escalating war of words is creating significant anxiety for Tesla shareholders, who have seen the stock’s value impacted by Musk’s non-automotive activities in the past.
“Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take,” wrote Wedbush analyst Dan Ives in a note. He added that any relief investors felt after Musk previously seemed to step back from politics “lasted a very short time and now has taken a turn for the worst with this latest announcement.”
Beyond the political spectacle, investors are also concerned with the tangible policy implications of the feud. A key point of contention is the potential elimination of EV tax credits and regulatory mandates in Trump’s bill, a feature that has been crucial for the EV industry’s growth.
“It is a Great Bill but, unfortunately for Elon, it eliminates the ridiculous Electric Vehicle (EV) Mandate,” Trump stated, confirming the risk to the incentives. “I have been strongly opposed to that from the very beginning.”
The combination of Musk’s increasingly unpredictable political engagement and the direct threat to government policies that have benefited the EV industry has created a challenging environment for Tesla stock, leading to Monday’s significant sell-off.
