Tesla Stock Slides as Trump Blasts Musk’s Third-Party Plans

Shares in Tesla dropped sharply Monday after CEO Elon Musk announced the formation of a new political party, drawing a strong rebuke from President Donald Trump. The stock fell as much as 7.6% in premarket trading before opening lower on the day. By mid-afternoon, Tesla shares remained down about 7%.

President Trump responded on his Truth Social platform, writing, “I’m saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks.” He also labeled the idea of forming a third party “ridiculous” and warned it would create confusion.

Musk, who has clashed with Trump in recent weeks, announced the launch of the “America Party” on Saturday, saying it would challenge both the Republican and Democratic parties. He criticized Trump’s recently signed tax and spending legislation, calling it fiscally irresponsible and claiming the U.S. operates like a “one-party system.”

Ahead of his trip on Air Force One Sunday, Trump doubled down, saying third parties “have never succeeded” and only create “disruption and chaos.”

Market analysts say the public dispute is making investors nervous. Neil Wilson, a strategist at Saxo Markets, said the feud may lead to changes in electric vehicle (EV) subsidies and distract Musk from his duties at Tesla. “Investors had cheered Musk stepping back from frontline politics,” Wilson said. “But now they’re worried he’s being sucked back in.”

The stock decline marks Tesla’s biggest single-day drop since June 5, when a previous public clash between Trump and Musk also rattled markets.

Tesla’s recent performance has already raised concerns. The company reported a 13.5% drop in second-quarter vehicle sales, and for the first time since going public, Tesla saw an annual decline in sales for the full year of 2024. Although the annual drop was small, it signals a major shift for the EV leader.

Tesla is now at risk of losing its top spot as the world’s largest EV maker to Chinese competitor BYD, despite BYD not yet entering the U.S. market.

Musk’s political involvement has also stirred controversy. Earlier this year, he led the Department of Government Efficiency and oversaw widespread federal layoffs. Protests followed at Tesla showrooms around the world.

In May, Musk stepped down from that government role, which had given investors hope he would focus more on his companies, including SpaceX and X (formerly Twitter). But the launch of a political party and renewed tensions with Trump have brought him back into the political spotlight.

Tesla shares had surged after Election Day on hopes of a Trump-Musk alliance. The stock hit record highs in December, but it has since lost over a third of its value as Musk’s political ambitions drew backlash.

Credit: CNN Newsource
Explore: NBCPalmSprings.com, where we are connecting the Valley.