Tesla Chief Executive Officer (CEO) Elon Musk's announcement to form a new political party led to a 6.8% drop in Tesla's stock on the New York Stock Exchange on the 7th (local time).
On that day, Tesla finished trading at $293.94, down 6.79% from the previous trading day. During the day, it fell to $288.77 (down 8.43%) before reducing some of its losses in the afternoon. Approximately $150 billion (206 trillion won) in market capitalization evaporated in one day.
Musk's declaration of forming the 'America Party' against U.S. President Donald Trump was a factor that contributed to the stock's sharp decline.
On the 5th, Musk stated on X that 'we are living in a single-party system that is bankrupting our country through waste and corruption' and announced, 'Today, the America Party was formed to restore your freedoms.'
In response, President Trump told reporters on the 6th, 'It saddens me to see Elon Musk completely go off the rails.' He dismissed Musk's new party formation as 'absurd,' saying it would only cause chaos.
Dan Ives, an analyst at Wedbush Securities, analyzed, 'Musk's deeper involvement in politics and his attempts to confront the political establishment are the opposite of what investors want at such a critical time for Tesla.'
There was also widespread fatigue among Tesla investors regarding Musk's refusal to withdraw from politics.
Neil Wilson, an investment strategist at Saxo Markets in the UK, analyzed that 'investors are concerned about two things if the conflict between Musk and Trump escalates: the potential for additional cuts to electric vehicle subsidies and Musk's distractions from his main business.'
Tesla's stock has moved significantly every time tensions between Musk and Trump have flared.
When their relationship first deteriorated on the 5th of last month, it plummeted by 14.26%, and when the tension reignited on the 1st of this month, it fell by 5.34%.
Musk, who actively supported Trump in last year's election, took on the role of head of the Department of Government Efficiency (DOGE), overseeing mass firings in the federal government, but turned against Trump after the termination of his special civil service position after 130 days. Musk has criticized Trump's key policy, the 'One Big Beautiful Bill' (OBBBA).