Tesla Shares Hit By Elon Musk's Plan To Form New Political Party

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(RTTNews) - Tesla Inc. shares were losing around 8% in the morning trading on the Nasdaq on Monday after CEO Elon Musk announced his plans to launch a new U.S. political party following his ongoing feud with President Donald Trump over the 'One Big, Beautiful Bill.'

Tesla founder and the former head of the Department of Government Efficiency or DOGE, launched the 'America Party' on Saturday in the latest development in the social media tussle with Trump.

Musk announced on X that he has formed the party to challenge the American two-party system, and that the new party's focus for the next 12 months will be on the House and the Senate.

Meanwhile, Trump called Musk's plans to form the America Party "ridiculous".

"I think it's ridiculous to start a third party," Trump told reporters. "It's always been a two-party system and I think starting a third party just adds to the confusion," he added.

Investors are concerned about the future of the luxury electric vehicle maker, which have been seeing significant downs since Trump took over the lead role and due to Musk's political focus.

The developments come as Tesla last week reported weak second-quarter production and deliveries amid lower demand. The company produced 410,244 vehicles and delivered 384,122 vehicles in the second quarter, compared to last year's production of 411,000 vehicles and deliveries of around 444,000 vehicles, respectively.

Musk, once a high-level supporter of Trump and a stronghold behind his election win, turned to be critic of the President following the introduction of the Big Beautiful Bill, a sweeping tax and spending package, by the Government. Musk warned the bill could worsen the federal deficit and undermine cost-cutting efforts led by the DOGE, while the U.S. president threatened to cut Musk's government contracts and subsidies.

Musk, who spent almost $300 million in the 2024 campaign to help Trump return to the White House, was appointed as special government employee and in charge of Trump's DOGE with a view to cutting down the size and unwanted expenses of the federal government.

However, he left DOGE eventually after leading the cost-efficiency drive, and after announcing earlier about his plans to allocate more time to Tesla.

Meanwhile, Musk's ties to Trump had affected Tesla significantly with severe protests at dealerships and brand damage. Tesla's shares had gained following the November 2024 election, but were severely hit since Trump took office in January over Musk's political activities and spending less time for the automaker.

The electric automaker also recorded a 71 percent cut in its first-quarter profit, below market estimates, with 9.2 percent drop in revenue as vehicle deliveries declined.

Recently, Tesla has been facing challenges China, its major market, amplified by the tariff tensions with Donald Trump.

Tesla is scheduled to post its second-quarter financial results after market close on July 23.

As of this writing, shares are losing 7.5 percent on the Nasdaq and trading at $291.77. The Market Cap fell below the $1 trillion mark, at $939.779 billion.