Tesla stock price drops as Musk leaps back into politics

Tesla’s stock was trading about 7% lower Monday morning, after CEO Elon Musk said over the weekend he’s creating a new political party amid his escalating feud with President Donald Trump.

Musk announced on Saturday that he had started the “America Party,” which he said would serve “the 80% in the middle.” In a series of social media posts, he suggested it could be a centrist political organisation that would seek to sway congressional politics by working alternately with Democrats and Republicans.

Trump ridiculed the idea in a Sunday press gaggle, saying another political party would only create confusion. “Third parties should never work,” Trump said. “So [Musk] can have fun with it. But I think it’s ridiculous.”

Political analysts point to numerous hurdles facing such an effort, from institutional barriers facing third parties to Musk’s declining popularity to the limited political constituency for his ideas. But Musk has already pointed to several races where he could play a spoiler - taking aim in particular at the massive policy bill that Republicans narrowly passed last week.

A new political party is also bad news for Tesla’s long-term prospects, say analysts. The electric vehicle maker suffered a harsh consumer backlash due to Musk’s close alliance with President Donald Trump and leadership of the US DOGE Service.

“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 during this crucial period for the Tesla story,” Dan Ives, managing director of Wedbush securities, said in a note to investors Sunday.

The stock lost almost half of its value in the first quarter of the year before recovering somewhat when Musk officially left the White House, then sank once again as Musk feuded online with Trump. Musk’s fight with the White House also comes at a time when Tesla needs regulatory approval to continue its self-driving car technology.

THE WASHINGTON POST