By Justin Varghese
Dubai: Tesla shares took a sharp hit in early trading on Monday, sliding over 7% in premarket hours, following CEO Elon Musk鈥檚 announcement of a new political venture dubbed the 鈥淎merica Party.鈥 The development marks another chapter in Musk鈥檚 high-profile鈥攁nd increasingly strained鈥攑olitical saga, which now appears to be unsettling investors once again.In a weekend post, Musk revealed plans to form a political party aimed at influencing a handful of U.S. Congressional seats, stating that winning 鈥渏ust 2 or 3 Senate seats and 8 to 10 House districts鈥 could provide the leverage needed to shape legislation. Statement sparks debateWhile he positioned the initiative as a response to what he described as a disconnect between government decisions and the 鈥渢rue will of the people,鈥 his statement sparked debate in political circles. This had a more immediate and measurable impact on Tesla Inc.鈥檚 market value, as investors reacted with concern to the billionaire鈥檚 growing political entanglements.鈥淭his is exactly the opposite direction that Tesla investors want Musk to take right now,鈥 said Dan Ives, global head of technology research at Wedbush Securities, in a client note on Sunday.鈥淭here is a broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track.鈥滷rom Trump ally to adversaryMusk鈥檚 political activity has been under scrutiny before. Earlier this year, he briefly joined a U.S. government panel鈥攖he Department of Government Efficiency (DOGE)鈥攚orking closely with President Donald Trump. That move sparked brand-related concerns among Tesla shareholders.His departure from DOGE in May was viewed positively by the market and contributed to a temporary recovery in Tesla鈥檚 share price. But his renewed political activism鈥攏ow positioning himself as a potential disruptor to Washington’s political establishment鈥攈as reignited those same investor concerns.Musk鈥檚 relationship with Trump has also soured. Once praised by the former president, Musk has recently criticized Trump鈥檚 fiscal policies, including cuts to renewable energy incentives and tax credits for electric vehicles.Trump, in turn, labeled Musk鈥檚 new political party 鈥渞idiculous鈥 on Sunday and accused the Tesla CEO of having gone 鈥渃ompletely off the rails.鈥滲usiness headwinds add pressureThe timing of Musk鈥檚 political announcement coincides with growing operational challenges at Tesla. The automaker recently reported a 14% year-over-year decline in vehicle deliveries for Q2, missing analyst expectations. While Tesla delivered 384,122 vehicles, some investors were braced for an even steeper drop, which had briefly buoyed the stock last week.Tesla shares rose 5% last Wednesday after the delivery numbers came in above worst-case projections. However, the stock remains down around 22% year-to-date, with mounting competition in key markets like China adding further uncertainty to the company鈥檚 trajectory.鈥淲e鈥檙e at the bottom here,鈥 said Gene Munster, managing partner at Deepwater Asset Management, speaking to Bloomberg. 鈥淏ut Musk needs to focus鈥攖his isn鈥檛 the time for distractions.鈥滻nvestor patience wearing thinFor long-time Musk supporters, the CEO鈥檚 outsized persona and boundary-pushing ventures have been part of the appeal. But for a growing number of institutional investors, his foray into political disruption comes at a sensitive time for Tesla鈥檚 fundamentals.The fear is not just reputational鈥攊t鈥檚 strategic. As Tesla navigates tightening margins, global EV competition, and rising pressure to innovate beyond vehicles, shareholder confidence hinges on Musk鈥檚 ability to stay focused on Tesla鈥檚 core mission.Bottom line? As Elon Musk steps further into political territory, investors are watching closely鈥攁nd reacting swiftly. Whether the “America Party” vision gains traction or not, its impact on Tesla鈥檚 market value and investor sentiment is already being felt.