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Tesla shares took a tumble after Elon Musk, the chief executive of the electric car maker, announced his intention to form a new political party, sparking a feud with US President Donald Trump.
On Monday morning, Tesla’s stock was down by 7 percent on Wall Street, marking a 15 percent decline over the past month. The ongoing clashes between Musk and Trump have been a contributing factor to this drop in share prices.
In May, Musk ended his time as a “special government employee” with the Department of Government Efficiency (Doge) and severed ties with the administration due to disagreements over the president’s tax and spending policies.
Since Musk’s departure from the administration, Tesla’s market capitalization has plummeted by $230 billion. The company’s valuation, which peaked at over $1.5 trillion in mid-December, now stands at around $920 billion.
In a bold move against Trump, Musk announced his plans to establish a new political party over the weekend. He cited the need to challenge the existing “one-party system” that he believes is undermining democracy in the United States.
Analyst Daniel Ives from Wedbush expressed concerns about Musk’s foray into politics, stating that it is not the direction that Tesla investors and shareholders would prefer during this critical period for the company.
Trump responded to Musk’s announcement by criticizing him on his Truth Social platform, describing Musk’s recent actions as a “train wreck” and expressing disappointment in his behavior over the past few weeks.
This public feud signifies a significant breakdown in the once close relationship between Musk and Trump, which was established when Musk supported Trump’s presidential campaign financially.
Following Trump’s return to the White House, he appointed Musk, who oversees Tesla and SpaceX, as the head of Doge. Musk was tasked with identifying ways to save trillions of dollars within the government.
