After Elon Musk announced the creation of his new America Party over the weekend, Tesla’s stock plummeted 6% on Monday and dropped another 7% in early Tuesday trading.
The sharp selloff pushed Tesla shares down to around $300, marking one of the biggest single-day declines in recent months.
Musk launched the America Party through a post on X, saying, “Today, the America Party is formed to give you back your freedom.”
While the stock briefly recovered to $315.65 on Tuesday, it quickly flattened at $315.35.
The political move has investors worried that Musk’s attention might shift away from running Tesla.
President Trump didn’t hold back his criticism.
He called out Musk on Truth Social, saying the billionaire had gone “completely off the rails.”
Trump also took aim at Musk’s political ambitions, noting that third parties “have never succeeded in the United States.”
The president announced he’d investigate subsidies tied to Musk, sending another shock through the markets.
Trump suggested Musk’s anger came from a spending bill that eliminated electric vehicle incentives.
The president now sees Musk as a competitor rather than an ally.
This marks a dramatic shift from December 2024, when Tesla’s stock peaked around $480 as investors bet on benefits from the Musk-Trump alliance. Analysts have since been closely monitoring the Tesla stock performance analysis, which reveals fluctuating investor sentiment amid changing market conditions. As uncertainty surrounding political alliances and economic factors grows, many are questioning the sustainability of the previous highs. This has led to a more cautious approach among investors, compelling them to reassess the future trajectory of Tesla’s stock.
Tesla’s facing tough times beyond the political drama.
The company delivered 384,122 vehicles in Q2 2025, a 14% drop from last year.
This number fell short of analyst expectations of 394,000 vehicles.
The company’s struggling with increased competition in the EV market and regulatory scrutiny. Despite the challenges, Tesla continues to advance its security technology, with vehicles equipped with Sentry Mode that transforms parked cars into comprehensive surveillance systems using eight external cameras. Wells Fargo maintains an underweight rating on the stock, citing deteriorating fundamentals and demand concerns. As the company navigates these turbulent waters, it is crucial for investors to analyze the upcoming tesla 2025.26 update overview, which is expected to outline key strategies for addressing these challenges. Additionally, improvements in production efficiency and potential market expansion could play a significant role in boosting confidence among shareholders. Tesla’s ability to adapt to changing market dynamics will ultimately determine its long-term success in the EV sector. Analysts are closely monitoring Tesla’s progress in Full Self-Driving technology, as it could significantly impact the company’s valuation. A recent tesla full selfdriving investment analysis highlighted the potential for increased revenue streams from autonomous ride-sharing services. However, uncertainties surrounding regulatory approvals and technological advancements remain hurdles that could affect investor confidence and market performance. Additionally, analysts are closely watching Tesla’s expanding business model, which now includes energy products and software services aimed at diversifying revenue streams. As the company navigates these challenges, its ability to innovate and adapt will be critical in maintaining market position. Investors remain hopeful that Tesla’s strategic initiatives will ultimately bolster its competitive edge and enhance shareholder value. As the market evolves, Tesla’s delivery challenges and investor concerns are becoming more pronounced, affecting overall market perception. Despite these hurdles, the company is investing heavily in expanding its production capabilities to meet global demand. Analysts suggest that addressing these issues will be crucial for Tesla to maintain its competitive edge in the increasingly crowded EV landscape.
Dan Ives, a market analyst, predicted Tesla shares would be “under pressure” as investors fear Trump’s retaliation.
Trading volumes were much higher than usual during the selloff, showing how sensitive the market is to political risks.
Tesla’s stock is down 27% year-to-date as of July 7, 2025.
Musk’s political activities have created protests, boycotts, and attacks on Tesla over the past year. Legal experts indicate potential conflicts exist between Musk’s political activities and his role as Tesla CEO, raising governance concerns.
Analysts warn Trump could create more problems for Musk’s companies, including Tesla and SpaceX.
The question remains whether Tesla’s investors will stick around through this political turbulence.