Tesla suffers sharp stock drop after new clash between Trump and Musk over political party
Tesla shares fell as much as 7.6% in pre-market trading on Monday after CEO Elon Musk announced the founding of a new political party.
President Donald Trump's immediate reaction was swift, creating a climate of uncertainty among investors.
In a post on his Truth Social network, Trump said:
“ It saddens me to see how Elon Musk has completely gone off the rails and become a total mess over the past five weeks .”
The president called the creation of the party “ridiculous” and stated that such movements only generate “complete and total DISRUPTION and CHAOS.”
President Donald Trump's immediate reaction was immediate. Photo: AFP
On Saturday, Musk announced from his X platform the formation of the America Party , with the aim of offering an alternative to the traditional two-party system.
“ When it comes to ruining our country with waste and corruption, we live in a one-party system, not a democracy ,” the businessman wrote.
Neil Wilson, a strategist at British firm Saxo Markets, warned that the stock market decline reflects concerns about two aspects:
- Regulatory risks: Possible cuts to electric vehicle subsidies by the Trump administration.
- Executive distraction: Fear that Musk will become actively involved in politics again and neglect Tesla's management.
He warned that the stock market decline reflects concerns. Photo: EFE.
The company faces multiple financial challenges. Last week it reported:
- A 13.5% drop in second-quarter sales.
- Its first annual sales decline as a public company, close to 1%.
- The possibility of being overtaken by BYD, a Chinese manufacturer that does not yet operate in the US, as the world leader in electric vehicles.
In addition to his business dealings, Musk has been the center of controversy for his brief tenure in government, where he headed the Department of Government Efficiency.
His tenure included mass layoffs and sparked protests outside Tesla stores around the world. He resigned in May, raising expectations of a return to a business-like approach.
Following the election, Tesla's stock had doubled, peaking in December 2024, amid expectations of a strategic alliance between Trump and Musk.
However, the growing confrontation between the two has reversed that trend, and the company's shares have lost more than a third of their value since then.
*This content was written with the assistance of artificial intelligence, based on publicly available information released to media outlets. It was also reviewed by a journalist and an editor.
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