Tesla Stock Plummets as Trump Critiques Musk’s Political Ambitions: What This Means for Investors

Tesla’s stock saw a significant drop recently, losing as much as 7.6% before the market opened. This decline followed CEO Elon Musk’s announcement about forming a new political party. His statement led to backlash, particularly from former President Donald Trump, who expressed his disapproval on social media.

In the trading that followed, Tesla shares recovered slightly but still opened lower. Investors are worried about two main issues. First, continued tension between Musk and Trump could impact U.S. electric vehicle (EV) subsidies, which are crucial for Tesla’s business. Second, analysts believe Musk might be distracted from running Tesla effectively due to his political aspirations.

Neil Wilson, a trading expert at Saxo Markets, noted investor concerns. “People were relieved when Musk took a step back from frontline politics, but now they fear he’ll get pulled back in,” he said. Musk’s move towards politics isn’t entirely new. Just a few months ago, he criticized Trump’s tax policies, raising tensions. Musk described his new party as a way to restore freedom, claiming that existing parties have turned U.S. governance into a “one-party system.”

Trump responded by calling third parties a source of chaos, suggesting they rarely succeed in the U.S. market. His comments hint at worries that Musk’s new venture might complicate the political landscape further.

This isn’t the first instance of turbulence for Tesla. The company has faced growing competition from other EV manufacturers and recently recorded a notable decline in vehicle sales for the second quarter, selling 13.5% fewer cars than the previous year. For the first time as a public company, Tesla also reported a slight annual drop in sales.

Moreover, there are significant stakes in the EV market. Tesla might soon lose its title as the largest EV maker to the Chinese automaker BYD, which has yet to enter the U.S. market. This shift underscores how competitive the EV landscape has become.

Public sentiment around Musk has also changed. His political involvements have sparked protests outside Tesla dealerships globally. Despite initially stepping back from government duties, Musk’s ongoing feud with Trump suggests he may be firmly back in the political arena, raising doubts about his focus on Tesla.

Overall, investors are in a precarious position. After soaring post-election, Tesla shares have fallen over a third of their value since Musk’s political activities gained traction. As this story unfolds, the tech and investment communities remain vigilant, eager to see how Musk balances his ambitions in both business and politics.

For more insights into Tesla’s challenges and competition, you can refer to studies by the International Energy Agency on global EV trends.



Source link