Along with SpaceX and Tesla, Elon Musk will now use OpenAI to bring his most ambitious new venture — the “America Party.” Tesla shares are reacting accordingly and fell by 7.13% at the time of writing in postmarket trading. This decline follows Musk’s controversial involvement with the Department of Government Efficiency (DOGE) and his close collaboration with former President Donald Trump, which some analysts believe could harm Tesla’s brand reputation.
Musk’s relationship with DOGE likely left investors confused. His surprising exit in May sent shockwaves through the tech world and had many pondering the long-term implications for Tesla. Initially met with praise given the timing was aligned with a surge in Tesla’s stock price, his departure came under a larger context of growing shareholder frustration. Musk’s new political venture may reignite concerns among shareholders who prefer that he focus on the company’s growth amidst rising competition, particularly in the Chinese market.
The America Party seeks out narrow, strategic electoral opportunities. Their strategy is to win 2 or 3 of those Senate seats and 8 to 10 of those House districts. Musk’s criticisms of recent cuts to tax credits and support for renewable energy and electric vehicles reflect his contentious relationship with Trump. In a notable clash, Musk has characterized Trump’s spending bill as potentially detrimental to America’s fiscal health.
President Trump recently called Musk’s political ambitions “ridiculous.” He followed that up with a statement saying Musk had really gone “totally off the rails.” This very public feud highlights the similarities and differences between two titans of American business and politics.
Analysts are starting to speculate on what Musk’s political foray means for Tesla. Dan Ives, a prominent financial analyst, stated, “Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story.”
He further added, “While the core Musk supporters will back Musk at every turn no matter what, there is a broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track.”
As Tesla faces increasing competition in its key markets, especially from Chinese automakers, Musk’s political distractions may complicate the company’s path forward. Investors are jittery over his political missteps. They express concern over the impact on Tesla’s stock performance and in turn its long-term growth strategy.