Tesla Stock Tumbles After Trump Criticizes Musk’s ‘America Party’

Tesla (TSLA) shares sank nearly 7% Monday after CEO Elon Musk announced he would form a new political party in an escalation of his feud with President Donald Trump.

Musk on Saturday announced the formation of the “America Party” after a July 4 poll on his X platform indicated 65% of responders supported the move. The post came just weeks after the Tesla CEO said he would refocus on his companies following a backlash to his role leading the Trump administration’s cost-cutting Department of Government Efficiency, or DOGE. 

On Sunday, Trump wrote on his Truth Social network that third political parties “have never succeeded in the United States,” and that Musk had gone “off the rails.”

With Monday’s losses, Tesla shares have declined 27% in 2025 so far. They have been dogged by concerns about Musk’s distractions from his role running the EV maker and his ongoing spat with Trump, his former ally, over the “One Big Beautiful Bill” the president signed into law last week. Falling global sales, as well as the removal of EV tax credits in Trump’s signature budget bill, have also weighed on the stock.

William Blair Downgrades Tesla Stock to ‘Market Perform’

William Blair analysts on Monday downgraded Tesla shares to a “market perform” from “outperform” rating, citing the negative impact on the EV maker from two aspects of Trump’s signature budget bill: the removal of the $7,500 tax credit that could weigh on demand from car buyers, and the elimination of fines on automakers that aren’t going green.

Trump’s bill eliminated fines for companies violating corporate average fuel economy, or CAFE, rules that encourage cleaner and more fuel-efficient vehicles. Tesla’s revenue from selling regulatory credits to other automakers who haven’t met their emissions targets came to $2.8 billion—or 16% of total gross profit—last year, according to the analysts. 

“Unlike the EV tax credit, we expect the reduction in regulatory credit revenue to result in a direct hit to profitability, prompting yet another across-the-board reset to Street models,” the analysts wrote. They added, in reference to Musk’s plan for a new political party, that investors are also “growing tired of the distraction at a point when the business needs Musk’s attention the most.”

This article has been updated since it was first published to include additional information and reflect more recent share price values.