Tesla investors hoping that CEO Elon Musk would stay out of politics after leaving his position in the Trump administration are going to be sorely disappointed -- again.
Disappointment is rarely good for stock prices.
On Saturday, Musk announced he was forming the "America Party," after running a poll on X asking if a new political party should be created. Musk has more than 225 million followers on X, and the poll garnered almost 79 million votes, with 65.4% saying "Yes" to a new party.
The move comes after Musk's strong opposition to President Donald Trump's "One Big Beautiful Bill," which was signed into law on Friday. The bill includes tax cuts and will increase the national debt by almost $4 trillion over 10 years, according to the Committee for a Responsible Federal Budget. Musk, who led Trump's efforts to slash the government while at the Department of Government Efficiency, opposes the debt increases.
But Musk's political activities couldn't come at a worse time for his businesses, according to Wedbush Securities analyst Dan Ives. Tesla is in the midst of launching long-expected self-driving taxis, which Ives and other Wall Street analysts believe can be worth between hundreds of billions to trillions of dollars for Tesla. What's more, Tesla plans to start selling significant quantities of humanoid robots in 2026.
"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," wrote Ives on Sunday.
In a post on his own social media platform, Trump said third parties rarely work, and he lashed out at Musk.
"I am saddened to watch Elon Musk go completely "off the rails," essentially becoming a TRAIN WRECK over the past five weeks," Trump said using his characteristic capitalization for emphasis. "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 one thing Third Parties are good for is the creation of Complete and Total DISRUPTION & CHAOS."
AI-trained taxis and robots haven't generated significant sales for Tesla yet. That still comes mainly from electric vehicles, and Tesla's EV business needs repair. Tesla sold about 721,000 vehicles in the first half of 2025, down 13% from a year ago. Wall Street, at the end of 2025, expected first half sales to land closer to 970,000 vehicles on the way to selling some 2.1 million cars this year. Now, analysts project 1.7 million vehicles sold, down from 1.8 million sold in 2024.
Politics played some role in the disappointing sales results, with Musk turning off some core EV buyers, namely politically left-leaning people looking to go green. Tesla management acknowledged brand challenges on their first quarter earnings conference call in April. Tesla reports second-quarter earnings on July 23. That will be an interesting conference call.
Coming into Monday trading, Tesla stock was up 25% since the Nov. 5 election, down 22% year to date, up 17% since news that Musk was likely to leave DOGE in early April, and down 8% since a spat broke out between Trump and Musk on social media in early June.
"While the core Musk supporters will back Musk at every turn no matter what, there is [a] broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track," added Ives. "After leaving...DOGE, there was initial relief from Tesla shareholders and big supporters of the name that Tesla just got back its biggest asset, Musk. That relief lasted a very short time and now has a taken a turn for the worst with this latest announcement."
Ives expects Tesla stock to be under pressure on Monday. He still rates shares a Buy and has a $500 price target.
Fairlead Strategies founder and market technician Katie Stockton has noted recently that Tesla stock has support in the $300 range. That is a level investors can watch on Monday.
Stockton isn't making a fundamental call on shares. She is using stock charts and market history to understand where investors have tended to buy and sell Tesla stock in the past.
As for the impact on the country, that's harder to say. Musk provided few specifics. "In the near term, the America Party idea appears likely to make [life] even more unpredictable," says Carl Tobias, Williams Chair in Law at the University of Richmond. In "the looming 2026 midterm elections...the GOP and Democrats will do all possible to win razor-thin majorities in the Senate and House."
Treasury Secretary Scott Bessent told CNN's State of the Union on Sunday that while the cost-cutting principles of DOGE were popular with voters, Musk was not.
"I believe that the boards of directors at his various companies wanted him to come back and run those companies," Bessent told CNN. "So, I imagine that those boards of directors did not like this announcement yesterday and will be encouraging him to focus on his business activities, not his political activities."
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