Tesla Stock Tumbles After Elon Musk Announces New Political Party

As of Monday, Tesla shares were down about 6.7 percent and are down about 14 percent since early June.

Elon Musk listens as then-President-elect Donald Trump addresses a House Republicans Conference meeting in Washington on Nov. 13, 2024. Andrew Harnik/Getty Images

Tesla stock dropped by more than 7 percent during trading on July 7 after CEO Elon Musk announced over the weekend that he’s forming the “America Party” to challenge the existing two-party political system, in a break with the Trump administration.

Musk launched a page for the America Party on social media platform X, which he owns, after he announced the party’s formation, citing a poll that signaled an interest in a third party.

“By a factor of 2 to 1, you want a new political party and you shall have it,” he wrote in a post on July 5. “When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy. Today, the America Party is formed to give you back your freedom.”

By 12 p.m. ET, Tesla shares were down by about 7.6 percent and were down by about 14 percent since early June, when Musk first publicly criticized the Republican-backed One Big Beautiful Bill and President Donald Trump.

Since the start of 2025, Tesla’s shares are down by 22.4 percent. Meanwhile, the company reported last week that deliveries fell by almost 14 percent in the second quarter of this year, amid backlash and protests due to Musk’s previous involvement in the Trump administration.

Trump was critical of Musk’s decision to form a third party and suggested that it would create confusion, adding that third parties have not been successful in the past.

“The one thing Third Parties are good for is the creation of Complete and Total DISRUPTION & CHAOS, and we have enough of that with the Radical Left Democrats, who have lost their confidence and their minds!” Trump wrote in a Truth Social post on July 6.

“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,” Trump told reporters on July 6.

The One Big Beautiful Bill Act, which Trump signed into law on July 4, is forecast to add about $3.4 trillion to the U.S. national deficit over the coming 10 years, according to an estimate from the Congressional Budget Office.

The Trump administration has dismissed such estimates, saying that they fail to take into account the economic growth that would be initiated under the bill.

Musk said that he would start the third party after he criticized the bill, saying it would add significant amounts to the national deficit.

But in his Truth Social post, Trump said that he believes that Musk is unhappy with the bill because it would remove federal subsidies for Tesla.

Reuters contributed to this report.