Shares of American electric carmaker Tesla fell on Monday after CEO Elon Musk announced the formation of his own political party.
Tesla shares fell 7% in New York after the open, the first day of trading since Musk announced the formation of an “American Party.”
Analysts and shareholders say Musk’s political activities have hurt the Tesla brand, and Dan Ives of Wedbush Securities is calling for the board to intervene.
Jed Dorsheimer of financial firm William Blair said investors see the political involvement as a distraction, while Tesla’s business demands Musk’s attention.
The South African-born billionaire became a leading supporter of US President Donald Trump last year and led a cost-cutting effort in Washington after his inauguration before announcing in the spring that he would return to Tesla.
Musk and Trump have since clashed in recent weeks over a major tax cut effort dubbed the “Big Beautiful Act,” with Musk vowing to renew his political efforts by forming a third party to counter Democrats and Trump’s Republicans.
Tesla’s share price plunge could be attributed to cuts to electric car subsidies included in Trump’s bill, which passed Congress last week.
The electric carmaker has been struggling with declining deliveries.
Elon Musk is by far the richest person in the world, with an estimated fortune of more than $360 billion.
However, that fortune is largely made up of his stakes in Tesla and private space company SpaceX, meaning Musk’s wealth fluctuates with Tesla’s stock price.
