Tesla stock prices have been falling during most of 2025 due to CEO Elon Musk’s involvement in politics. His recent suggestions have investors concerned.
Elon Musk is best known as the CEO of Tesla, and he has several other companies in his portfolio, but what some people don’t know is that he also has many government contracts. This, along with his support of the current executive administration, put him in a position of authority and influence within the government. That isn’t what has investors worried at the moment though; it’s a new direction of political involvement that might see the Tesla stock prices drop precipitously.
Will Musk head up a new political party?
Elon Musk has expressed plans to launch a new political party in the United States. This new “America Party,” which has been suggested by Musk after his disputes with the current White House administration, has left his investors concerned. There are serious discussions regarding his commitment to Tesla and turning around the company that has been struggling with declining sales all year long. As of July 7, Tesla was set to lose as much as $80 billion in market valuation, nearly all of which has to do with Musk’s political involvement.
Electric cars might not be the future
Tesla has led the way in the electric vehicle market, showing the world what it means to have a useful EV with enough range to make sense for most drivers. The Tesla Model S has been the leader in this category for many years and provides many drivers with a luxury-level vehicle with incredibly advanced technology and engineering. Unfortunately, when the new administration took over, EVs became less important, and now that the OBBBA has been passed, the Federal EV Tax Credit that was renewed under the Inflation Reduction Act will end this year instead of in 2032 as originally planned.
What does this mean for EVs and Tesla?
Will EV sales continue to decline without the tax credits? That is yet to be seen, but EV sales haven’t declined yet, but aren’t growing at the same rate that was expected during the past few years. This could be trouble for Tesla because it only makes electric vehicles. Other automakers, such as GM, Ford, Stellantis, Toyota, etc., can focus on their non-EV models and make up the difference in expected sales, but other companies, like Tesla and Rivian, cannot.
Should Musk have involved himself in politics?
The flashy and boisterous Elon Musk might eventually regret his involvement in politics and regret backing the candidate that he did. It seemed flashy and fun for him while he was involved in DOGE, but during that time, and after he left the government, Tesla stock prices have continued to fall.
It doesn’t seem that he learned that he should stick to electric cars or advanced technology, considering he wants to begin a new political party in the United States. Word of this desire came to the surface after Musk displayed his displeasure at the OBBBA passing, which increases the annual deficit by more than $600 billion and will add $4.1 trillion to the national debt, which already sits at more than $35 trillion.
Why is Musk so upset about the OBBBA?
The increase in debt and deficit flies directly in conflict with what Elon Musk was working toward as a member of DOGE. His goal was to decrease spending anywhere he could while making the government more efficient. Regardless of how you feel about how he went about doing this, that was the ultimate goal. Seeing the first major piece of legislation passed under this new administration raise the debt and deficit as much as it does goes completely against everything Musk was working toward.
Are there any other factors?
The current administration has also threatened to cut off the billions of dollars in subsidies that Musk’s companies receive due to tensions between the two parties. This feud became a social media brawl in June, which resulted in Tesla stock value losing $150 billion in one day.
Tesla has reported a second straight drop in quarterly deliveries, which has caused the stock to lose 35% of its value compared to the record high it experienced in December. Considering the events of the first half of the year, it’s not surprising that the stock has lost so much value during this time.
Political distractions are disastrous for Tesla
Some shareholders and board members have expressed extreme concern and frustration over Musk’s involvement in politics. As much as the “stay in your lane” discussion can be offensive to some people, it seems to apply in this case. This can be summed up well with:
“I and every other Tesla investor would prefer to be out of the business of politics. The sooner this distraction can be removed and Tesla gets back to the actual business, the better.”
– Camelthorn Investments adviser Shawn Campbell (Tesla shareholder)
The board remains steady
So far, Tesla’s board, which has been criticized for failing to rein in the combative CEO in the past, has stood firm and hasn’t considered removing Elon Musk from his position. This doesn’t provide much confidence in the company as Tesla stock prices continue to decline. Something needs to change at Tesla, and that might mean removing Elon, but it also could be as simple as Musk distancing himself from politics and the current executive administration as quickly as possible.
