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Home Business & Finance Economic Policies

Tesla Stock Sinks as CEO Elon Musk Floats a New Political Party todayheadline

July 7, 2025
in Economic Policies
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Tesla (NYSE: TSLA) stock is trading lower in US premarket price action today as CEO Elon Musk has talked about floating a new political party, named “America Party.”

Notably, Musk headed Trump’s Department of Government Efficiency (DOGE) until May and was tasked with eliminating “wasteful” government expenses. However, the bonhomie between Musk and President Donald Trump ended shortly after the world’s richest person left the White House.

The feud started with Musk criticizing Trump’s tax and spending bill, but soon got ugly. Musk is against the One Big Beautiful Bill Act (OBBBA) as it would add to the national debt and undo the work he did at DOGE, and termed it “DEBT Slavery Bill.”

Meanwhile, many believe that Musk’s opposition to the bill is at least in part due to it ending the electric vehicle (EV) tax credit of $7,500. The credits, which helped make electric cars affordable for many Americans, would be terminated after September.

Trump Terms Musk’s New Political Party Ridiculous

Trump has also said that Musk turned against him because the administration is doing away with EV-friendly policies that benefited Tesla. “I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!” said the President in a social media post last month.

Meanwhile, Trump is not too convinced that Musk’s political party would be a success.  “I think it’s ridiculous to start a third party. We have a tremendous success with the Republican Party. The Democrats have lost their way, but it’s always been a two-party system, and I think starting a third party just adds to confusion,” said the President, speaking with reporters.

He added, “It really seems to have been developed for two parties. Third parties have never worked, so he can have fun with it, but I think it’s ridiculous.” It’s also worth noting that under US laws, Musk cannot run for president since he wasn’t born in the country.

Tesla Benefited from Musk’s Association with Trump

Meanwhile, while the bonhomie between Musk and Trump has ended, the former’s companies, including Tesla, benefited during his term with the Trump administration. For instance, Trump relaxed autonomous driving crash reporting requirements, which helped Tesla roll out its robotaxi service.

The most significant change impacts vehicles with Level 2 semi-autonomous technology, such as Tesla’s Full Self-Driving (FSD). Under the updated rules, many non-fatal crashes involving these systems no longer need to be reported to the National Highway Traffic Safety Administration (NHTSA). Previously, any crash requiring a tow truck, regardless of injury, had to be documented. Now, reporting is generally only required if there’s a fatality, hospitalization, airbag deployment, or involvement of a “vulnerable road user.”

The Trump administration also narrowed the scope of monthly crash reports, focusing more on incidents involving significant property damage. The requirement for entities to confirm a lack of reportable information each month was also removed.

Tesla Has Reported a Fall in Deliveries for Two Quarters

As vehicle sales growth turns negative with deliveries falling in double digits for two consecutive quarters, Tesla has been focusing on other aspects of its business, particularly autonomous driving and robotaxis.

Meanwhile, with Musk’s feud with Trump only escalating, Tesla faces risks of adverse policies. The President has already called for a review of all the subsidies that Musk’s companies receive, and the OBBBA will terminate the EV tax credit later this year.

tsla stock

Concerns Over Musk Spending Adequate Time at Tesla

Musk expanding his political activity with the new party is also making markets apprehensive about the billionaire’s ability to devote adequate time to Tesla. Such concerns have been around for quite some time, as apart from Tesla, Musk also heads several other companies like SpaceX and Neuralink. Of late, he has added X and his artificial intelligence (AI) startup xAI to the ever-growing list of companies that he owns.

As Tesla bull and Wedbush analyst Dan Ives said, “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.”

He added, “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.”

According to Ives, “While the core Musk supporters will back Musk at every turn no matter what, there is broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track.”

Musk’s Massive Compensation Faces Scrutiny

Notably, Musk’s mammoth $56 billion compensation plan – the largest in US corporate history – faces scrutiny and was rejected twice by Delaware Chancery Court Judge Kathaleen McCormick

Last year, Senator Elizabeth Warren, who sat on the Senate’s Banking Committee, sent a letter to Tesla Chairperson Robyn Denholm expressing concerns over Musk’s potential conflicts of interest.

She pointed to Musk heading multiple private companies like SpaceX, Neuralink, The Boring Company, and X Corp. Warren said that it’s the responsibility of Tesla’s board to ensure that Musk is meeting his responsibilities towards Tesla. “In the event that the Board fails to meet this duty, I am requesting additional information to understand whether intervention by the Securities and Exchange Commission (SEC) or other regulatory agencies may be necessary.”

Tesla Board Might Need To Get Involved

Ives, who says Musk is Tesla’s “biggest asset,” believes the company’s board might take up the issue of his political activities. “It would also not shock us if the Tesla board gets involved at some point given the political nature of this endeavor depending on how far Musk takes it,” said Ives in his note.

Meanwhile, Tesla stock is trading over 6% lower in US premarkets today as markets digest his plans to form a political activity. The stock, which is already the worst-performing among “Magnificent 7” peers this year, looks set to further extend its YTD drawdown today.

About Mohit PRO INVESTOR

Mohit Oberoi is a freelance finance writer based in India. He has completed his MBA in finance as a major. He has over 15 years of experience in financial markets. He has been writing extensively on global markets for the last eight years and has written over 7,500 articles. He covers metals, electric vehicles, asset managers, tech stocks, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.

Tags: CEOElonfloatsMuskpartyPoliticalsinksStockTeslatodayheadline
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