Tesla’s stock took a nosedive Monday, plummeting 7.6% in premarket trading after CEO Elon Musk announced plans for a new political party. The move riled up President Donald Trump, who didn’t hold back on Truth Social, calling Musk a “TRAIN WRECK.” Investors, already jittery, watched the drama unfold with all the enthusiasm of someone stuck in a Monday morning traffic jam.
The stock opened at 9:30 a.m. ET, still down 7.6%, marking Tesla’s worst single-day loss since June’s social media showdown between Musk and Trump. That earlier spat was over Trump’s “Big, Beautiful Bill,” a tax and spending plan Musk labeled a budget-busting disaster. Now, Musk’s latest political stunt has investors clutching their wallets and wondering if he’s steering Tesla off a cliff.
Musk, never one to shy away from a keyboard, fired back on X, declaring the U.S. a “one-party system” drowning in “waste & graft.” He announced the “America Party” to “give you back your freedom,” a bold claim that sounds like it belongs on a campaign bumper sticker. Trump, unimpressed, scoffed that third parties only bring “DISRUPTION & CHAOS,” a sentiment shared by anyone who’s ever tried to organize a three-way group chat.
The market’s reaction was swift and unforgiving, with Tesla shares on track to shed billions in value. Neil Wilson, a strategist at Saxo Markets, pointed out the double whammy hitting investors: fears of Musk’s distraction and the potential loss of juicy EV subsidies. “Investors thought Musk was done with politics, but now he’s diving back in headfirst,” Wilson noted, probably imagining Musk juggling Tesla’s steering wheel and a campaign megaphone.
Tesla’s troubles aren’t just political. The company reported a 13.5% drop in second-quarter sales compared to last year, a record low that left analysts wincing. For the first time, Tesla’s annual sales dipped by 1%, a small but shocking stumble for a company used to sprinting past competitors.
Adding insult to injury, Chinese automaker BYD is poised to snatch Tesla’s crown as the world’s top EV maker by sales. BYD hasn’t even cracked the U.S. market yet, but it’s already leaving Tesla in the dust. It’s the corporate equivalent of being lapped by a rival who didn’t even show up to the race.
Musk’s brief stint running the Department of Government Efficiency didn’t help matters. His push for federal layoffs sparked protests outside Tesla showrooms worldwide, with angry crowds waving signs instead of checkbooks. Customers, it seems, aren’t thrilled about buying cars from a guy moonlighting as a government downsizer.
Investors had hoped Musk’s May exit from his government role would refocus him on Tesla, SpaceX, and X. Those hopes soared post-election when Tesla’s stock nearly doubled, hitting a record high in December. The Musk-Trump alliance seemed like a golden ticket, with visions of deregulation and robotaxi-friendly policies dancing in shareholders’ heads.
But that dream crashed faster than a Cybertruck in a stress test. Musk’s renewed political crusade and Trump’s sharp retorts have wiped out over a third of Tesla’s stock gains since December. The feud has turned a once-cozy partnership into a public brawl, leaving investors to pick up the pieces.
Trump didn’t mince words, dismissing Musk’s party as “ridiculous” while boarding Air Force One in New Jersey. He argued third parties have never worked in the U.S., a history lesson that might not sway Musk, who’s more accustomed to rewriting rulebooks than reading them. The president’s Truth Social posts painted Musk as a subsidy-hungry mogul gone rogue, a jab that hit harder than a low battery warning.
Musk’s response? A vow to unseat lawmakers who backed Trump’s bill, coupled with fiery posts about a “PORKY PIG PARTY.” His X poll, which garnered 5.6 million votes with 80.4% supporting a new party, suggests he’s not alone in wanting to shake up the system. Whether that translates to votes or just retweets remains anyone’s guess.
Tesla’s not the only one feeling the heat. Trump Media and Technology Group, the president’s own social media venture, dropped 8% as the feud escalated. It’s a reminder that in this high-stakes soap opera, no one’s stock price is safe.
Analysts are now sounding alarms about Tesla’s future. Wedbush’s Dan Ives called the sales drop a “disaster on every metric,” urging Musk to pick a lane—CEO or political firebrand. With EV subsidies on the chopping block and competitors like BYD circling, Tesla’s road ahead looks bumpier than a dirt track.
Musk’s political ambitions might be a noble quest for some, but for Tesla shareholders, it’s a costly detour. The company’s focus on robotaxis and AI could still turn things around, but only if Musk stops tweeting long enough to drive the bus. For now, investors are left watching their portfolios shrink while Musk and Trump trade barbs like kids fighting over the last slice of pizza.
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