Tesla stock took a sharp hit on Monday as Elon Musk’s political announcement sent investors into retreat. Shares dropped nearly 7% marking one of Tesla’s worst days since early June. Musk announced his new political party over the weekend and called it the “America Party.”

The billionaire CEO said the party would target only a few Senate and House seats and act as a swing force to influence major legislation. Musk explained that this small influence could ensure laws reflect the true will of the people.

Musk’s Political Plans Stir Investor Concerns Amid Falling Tesla Sales

Wall Street did not welcome the move. Analysts say investors are tired of Musk mixing business with politics. Musk had previously helped form the Department of Government Efficiency with Trump but left in May after backlash.

Dan Ives from Wedbush Securities said the political move is not what shareholders want. He warned that Musk’s political turn comes at a time when Tesla needs strong business focus. “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,” Ives said.

“President Trump called Musk’s new party ridiculous and claimed the Tesla boss had gone off the rails.”.

Tesla also reported a 14% drop in vehicle deliveries in Q2 which added pressure. China remains a critical market but competition is increasing. Investors worry that Musk’s political goals could pull attention away from much-needed strategy and innovation at Tesla.