Telsa’s shares dropped sharply on Monday after chief executive Elon Musk over the weekend said he would form a political party called the America Party, raising questions over his commitment to leading his companies.
The move came about six weeks after Musk ended his involvement with the Trump administration and vowed to return ot leading his companies full-time.
The news came after Tesla reported its second consecutive quarter of falling sales.
Sales decline
The company’s stock has declined about 27 percent this year and is about 35 percent down from a high in December, at a time when Musk was seen as a close ally to Trump but before he had begun actively engaging in the administration.
Wedbush analyst Dan Ives, a prominent Tesla supporter, said there was a “broader sense of exhaustion” from many Tesla investors over Musk’s continued political involvements.
After Tesla reported its latest sales decline last week, Ives had predicted an “accelerated growth path” for Tesla now that Musk was more focused on the company, saying he expected deliveries to ramp up in the second half of this year following the introduction of a new Model Y compact SUV.
“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 in a research note.
He said that the White House could now view Musk “more as a foe than a friend”, potentially endangering billions of dollars in subsidies that Musk’s companies receive.
‘Distraction’
“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 actual business, the better,” said Shawn Campbell, an adviser at Camelthorn Investments who owns Tesla shares.
Wedbush’s Ives said it would not “shock” him if Tesla’s board got involved to exert pressure on the company’s chief executive and largest shareholder.
But other analysts said the board had played a largely passive role until now and was unlikely to take action.
Tesla board char Robyn Denholm, selected personally by Musk for the role, supported his record-breaking $56 billion (£41bn) compensation package that was set in 2018 but rejected by a Delaware judge in January 2024.
Tesla has yet to deliver on a promised low-cost car model and recently launched an autonomous taxi service in Austin, Texas that it said it was planning to scale rapidly.