The battle between Elon Musk and Pres. Donald Trump has rapidly escalated as the Tesla CEO lays out plans to launch a new political party. But the Texas-based automaker is already suffering collateral damage. Days after Tesla announced another sharp decline in sales for the second quarter, the automaker’s stock price is taking a sharp hit as investors race for the exit. More from Headlight.News.
The feud began barely a week after Musk and Trump said farewell in the Oval Office.
Responding to the passage of Pres. Donald Trump’s controversial federal spending bill, Tesla CEO Elon Musk formally announced plans to launch the new “America” political party over the long holiday weekend.
“When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy,” the world’s richest man said in a post on X, his social media site.
The news triggered a sharp rebuke from Trump who, in a post on his own Truth Social site, said his former ally had gone “completely ‘off the rails,’ essentially becoming a TRAIN WRECK.” It appears that Wall Street may agree.
Musk the latest to launch a third party
In a post on July 5, Musk wrote “By a factor of 2 to 1, you want a new political party and you shall have it.”
If he actually Musk follows through it would mark the latest in a long and largely futile series of third parties aimed at addressing various concerns with the existing political establishment. The last time a new party succeeded in reaching the White House was when Republican Abraham Lincoln was elected president.
Voters routinely find candidates for fringe parties, such as the Greens, the Socialists and even the Communists, on their ballots. But they generally have little impact on national elections. Even former Pres. Teddy Roosevelt couldn’t use the third-party path to retake the White House when he launched a campaign under the Bull Moose banner.
That’s not to say third parties can be ignored. There’s an ongoing debate over whether billionaire businessman H.Ross Perot cost George H.W. Bush his reelection bid in 1992. And the campaign by activist Ralph Nader may have cost Vice President Al Gore his chance of moving up into the Oval Office eight years later.
Trump fires back
In his Truth Social post, Trump noted the failed history of third-party campaigns, writing that Musk’s plan flies in face of “ the fact that they have never succeeded in the United States – The System seems not designed for them. The one thing Third Parties are good for is the creation of Complete and Total DISRUPTION & CHAOS, and we have enough of that with the Radical Left Democrats, who have lost their confidence and their minds!”
A number of political analysts warned that such “disruption and chaos” could be particularly problematic for the Republic Party, however, what with the latest polls showing Trump’s policies, in general – and the budget bill, in particular – generating sharp pushback from the American public.
The latest war of words appears to create a permanent schism between the two men who, barely a month ago, had seemed the closest of allies, Musk doing much of Trump’s push to slash the size of the federal government through the Department of Government Efficiency.
More Tesla News
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Things fall apart
Pres. Donald Trump last week suggested he might “look at” the possibility of having Elon Musk deported.
But within days of an Oval Office media briefing meant to celebrate Musk’s return to the corporate business world, things fell apart. In a series of brusque social media posts and interviews, the two men took sharp aim at one another. At one point, Musk dropped a potential bombshell, hinting that the FBI had documents linking the president to the serial sexual abuser Jeffrey Epstein.
The two appeared to seek a truce, Musk saying he “went too far” with some – though, apparently, not all – of the things he said about Trump.
But the peace didn’t last long. If anything, the South African-born executive amped up his criticism of the federal spending bill and warned he could launch a third party.
In turn, the president suggested he will “take a look” at the possibility of having Musk deported for some unspecified reason.
Investors panic
Musk first lent support to Trump during a brief stay on a business council created during the president’s first administration.
Musk’s announcement sent the stock market into a frenzy, triggering a sell-off in overnight trading, with Tesla stock down in the low $290 range as of midday Monday, a roughly 7% decline from its close ahead of the long Independence Day holiday weekend.
It isn’t the only reason why Wall Street is worried, however. Concerns have been building for several weeks over a variety of issues, including the troubled launch of Tesla’s first robotaxis on June 12, and then as a result of the 13.5% decline in its global second-quarter sales.
Then there’s the “Big Beautiful Bill,” the Trump-backed spending measure approved by both houses of Congress last week. It echoes earlier moves by the president backing away from the strong support for EVs by his predecessor Joe Biden. Among other things, it will eliminate federal tax credits of up to $7,500 for electric vehicle buyers. But it also could eliminate the zero-emission vehicle credits that have generated billions of dollars in revenue for Tesla over the years.
Collateral damage
Musk has plenty of money he could use to create a new political party. But that could come at Tesla’s expense, some analysts warn.
All this may simply be “too much for investors to bear,” Jed Dorsheimer, a widely followed analyst with William Blair, advised investors Monday. He downgraded his rating for Tesla from Buy to Hold.
What happens on Wall Street is just one of the things Tesla’s board of directors now needs to worry about. Even before last November’s election the automaker was losing momentum as more competitors entered the EV space. It came into the crosshairs, however, when Musk signed on as the head of DOGE, triggered widespread protests around the world and a backlash that resulted in a double-digit decline in sales for the first half.
“The principles of DOGE were very popular,” Trump’s Sec. of the Treasury Scott Bessent said during on CNN. However, “I think if you looked at the polling Elon was not.”
Whether there really is support for a new third party remains to be seen. And even if the public buys in there’s no way to know if that will help resuscitate Musk’s reputation – or Tesla’s.
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