Tesla shares took a major hit on Monday, plummeting 6.8% to close at $293.94 on the Nasdaq, following CEO Elon Musk’s surprise announcement that he is launching a political party named the ‘America Party.’ The move has heightened investor concerns that Musk’s growing political interests are further distracting him from Tesla’s core business, which is already facing declining sales and increased competition.
One of Tesla’s Worst Days in 2025
The sharp decline marked one of the worst single-day performances for Tesla this year. In monetary terms, the EV giant lost more than $68 billion in market capitalization in a single session. If the downward trend continues, analysts estimate that Tesla could shed over $80 billion in valuation, raising questions about the company’s long-term stability and leadership.
Political Feud with Trump Escalates
The controversy escalated after Musk had a very public falling out with former ally and current U.S. President Donald Trump, particularly over a tax-cut and spending bill. Trump mocked Musk’s new party as “ridiculous” and threatened to cut off billions in federal subsidies to Musk’s companies. The feud, which began in early June, previously wiped $150 billion off Tesla’s value in a single day during that period.
Investor Concerns Over Distraction and Leadership
Musk’s political ambitions are prompting renewed scrutiny of Tesla’s governance. While Tesla Chair Robyn Denholm denied earlier reports of efforts to replace Musk, the latest developments have reignited debate over the board’s oversight. Some analysts argue that Musk’s increasing political entanglement is eroding public trust and shifting focus away from Tesla’s innovation and performance.
“The company is set to lose more than $80 billion in market valuation if current losses hold,” said Jed Dorsheimer, an equity analyst, as quoted by Bloomberg.
Musk’s Net Worth Takes a Hit
The fallout also dented Musk’s personal fortune. On Monday alone, his net worth dropped by $15.3 billion, reducing his year-to-date wealth loss to $86.7 billion, according to the Bloomberg Billionaires Index. Despite the dip, Musk remains the world’s richest person, with an estimated net worth of $346 billion.
What’s Next for Tesla?
With Tesla shares already down 27% this year, largely attributed to Musk’s political distractions and market headwinds, investors are watching closely for any corrective measures from the board or leadership reassurances from Musk. As Tesla juggles falling consumer demand, rising competition, and internal distractions, the road ahead may prove turbulent unless priorities are refocused.
