Tesla stock dropped 7% on Monday after tensions between CEO Elon Musk and Donald Trump reignited over the weekend, raising investor concerns about the company’s future.
Musk, who was once a key supporter and donor to Trump, announced plans to form a third political party. His move comes in protest against a recently passed Republican spending bill, which he criticized for threatening job growth and stifling innovation in emerging industries.
The political clash drew a sharp response from Trump, who wrote on social media Sunday that Musk had gone “off the rails” in recent weeks. The public exchange has sparked fears that federal support for Musk’s ventures—Tesla, SpaceX, and the platform X—could be at risk if the feud intensifies.
Dan Ives, an analyst at Wedbush Securities, warned in a note to clients that continuing to antagonize Trump could backfire on Musk’s businesses. “With the autonomous future ahead and the AI revolution gaining steam, Musk and Tesla don’t need to keep provoking Trump,” Ives wrote. “This political battle could create more roadblocks heading into the 2026 midterm elections.”
Musk’s increasingly vocal political views and alignment with far-right parties have already weighed on Tesla’s brand. The automaker has seen its stock fluctuate widely over the past year, as Musk became more involved in right-wing political discourse and took a prominent role in the Trump administration.
Tesla’s business has also been under pressure. The company reported a 13% drop in sales in both the first and second quarters, even as competitors—especially legacy automakers in Detroit—posted gains in electric vehicle (EV) sales. Analysts point to Musk’s political stances as a contributing factor to the decline, noting growing backlash among consumers.
In addition to domestic challenges, Tesla is facing increased competition from Chinese EV makers like BYD and Great Wall. These companies are gaining traction globally by offering more affordable models with advanced fast-charging technology.
Tesla shares have dropped about 40% since reaching their record high of $479.76 in December. As of Monday, the stock was down to $289.75, shedding roughly $26 since Thursday’s close.
Also Read:
US Stock Indexes Climb Again as Tesla Leads the Way
Stocks Climb as Attention Shifts from Trump-Musk Dispute to May Jobs Report
