Tesla stock sank nearly 7% on Monday, erasing more than $68 billion in market capitalization, after CEO Elon Musk announced plans to launch a new political party in the United States.

The sudden drop reflects mounting investor anxiety over Musk’s increasingly political profile — a development analysts say is once again pulling his attention away from Tesla’s core business amid a period of declining sales and rising competition.

The billionaire entrepreneur revealed on Saturday that the new formation, dubbed the “America Party,” will aim to influence a limited number of Congressional races in 2026 — just “2 or 3 Senate seats and 8 to 10 House districts,” Musk posted on X. The goal, he said, is to hold enough sway to become a decisive voting bloc on controversial bills, claiming it would help “ensure that [laws] serve the true will of the people.”

But for investors, the move was anything but strategic.

Political Chaos Reignites Investor Frustration

Musk’s announcement set off a wave of concern among Tesla shareholders, many of whom have spent the last year urging the CEO to pull back from overt political engagement. The reaction was swift and harsh on financial markets.

“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,” said Dan Ives, global head of tech research at Wedbush Securities.

Tesla has already endured several rough quarters. The company recently reported a 14% year-over-year decline in vehicle deliveries for the second quarter — a glaring miss that reflects softening demand in the U.S., growing competition in China, and lingering macroeconomic pressures. With Musk now pivoting back into the political arena, many investors fear Tesla could again become collateral damage in the public discourse.

Some analysts say the current storm is reminiscent of the turbulence surrounding Musk’s tenure at the Department of Government Efficiency (DOGE) — a federal initiative he joined earlier this year to streamline government spending. While his involvement was lauded by some for its reformist tone, it brought with it intense political scrutiny, partisan backlash, and headline-grabbing controversies that many blamed for Tesla’s stock struggles at the time.

“I think Elon’s biggest challenge for the next 16 months is ensuring Tesla investors that this third-party involvement will not result in the same outcome that DOGE introduced,” an analyst wrote on X.

“Violence against Tesla, polarizing takes, constant negative headlines against the CEO, brand-damage concerns, etc. It is quite obvious that a significant percentage of the retail base is tired of the constant political chaos.”

The analyst named Farzad added that there had been a “collective sigh of relief” when Musk left DOGE in May. His re-entry into political activism, therefore, is being seen as a step backward — and possibly a catalyst for more instability around Tesla.

A Divided Investor Base

Tesla’s investor community is increasingly split. On one side are long-time believers in the company’s bold vision — including Robotaxi development, Optimus humanoid bots, and next-gen batteries — who see current stock dips as buying opportunities. On the other are retail and institutional investors who’ve grown weary of the non-stop drama surrounding Musk’s media presence and political provocations.

“Tesla investors are definitely entering a volatile time — if they haven’t already,” Farzad continued. “Many who believe in Tesla’s Robotaxi & Bot ventures will view this as a buying opportunity. They will likely be buying the shares of people who have simply hit a limit to how much they can bear Elon being in the public light with politics.”

Trump Slams Musk’s Party

Musk’s announcement also revived tensions with President Donald Trump, whom Musk once advised on several issues. The two have since diverged, particularly over Trump’s controversial spending bills and cuts to electric vehicle tax credits and green energy subsidies — policy shifts Musk has openly criticized.

Trump dismissed Musk’s third-party plans as “ridiculous” over the weekend, saying the Tesla CEO had gone “completely off the rails.”

This latest public spat only reinforces the perception that Musk is no longer able to separate his political stances from his business interests — a dynamic that many investors fear could continue to damage Tesla’s brand, especially in an increasingly polarized consumer environment.

Tesla Shares Dive Again

The market reaction saw Tesla shares fall nearly 7%, and the broader tech-heavy Nasdaq also dipped, with Tesla among the top laggards. This comes just days after the S&P 500 and Nasdaq closed at all-time highs, buoyed by optimism over inflation easing and a strong earnings season ahead.

But Tesla’s political entanglements are introducing risks that many of its peers are not facing.

“This is the most hated V-shaped rally,” said Tom Lee, head of research at Fundstrat, referring to how Tesla’s stock has previously rebounded from sharp drops — but always with asterisks tied to Musk’s personal moves.

As Tesla heads into its second-half earnings season, shareholders will be looking for clarity on key programs like Full Self-Driving, the next-gen Model 2, the much-delayed Cybertruck ramp-up, and Optimus. But those ambitions could be overshadowed by political crossfire if Musk’s “America Party” becomes a persistent headline.

U.S. President Donald Trump ignited international uproar on Sunday after vowing to slap punitive tariffs on countries aligned with the BRICS bloc, a group of emerging economies that has increasingly positioned itself as a counterweight to U.S.-led global economic structures.

The warning, issued in a post on Trump’s Truth Social account, stated: “Any country aligning itself with the anti-American policies of BRICS will be charged an ADDITIONAL 10% tariff. There will be no exceptions to this policy.”

The threat came just hours before the conclusion of the BRICS leaders’ summit in Rio de Janeiro and sent immediate shockwaves across the diplomatic landscape, especially among members and aspiring members of the bloc.

At a post-summit press conference, Brazilian President Luiz Inácio Lula da Silva, host of this year’s BRICS gathering, issued a blistering response, accusing Trump of behaving like a global emperor and warning that such economic intimidation was out of step with the current world order.

“I don’t think it’s very responsible and serious for a president … of a country the size of the U.S. to threaten the world over the internet – it’s not right,” Lula said. “The world has changed. We don’t want an emperor.”

Lula stressed that BRICS countries are sovereign and have the same right as the United States to determine their own trade policies and partnerships. “People need to understand that respect is good – we like to give it, and we like to get it in return,” he added.

BRICS as a Symbol of the Global South’s Rise

Trump’s tariff warning comes amid the bloc’s rapid expansion and growing influence. BRICS—originally comprised of Brazil, Russia, India, China, and South Africa—has in 2025 expanded to include Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates, making the group a more potent coalition of economies outside the Western orbit.

Despite internal differences, the bloc used this year’s summit to present a united front, releasing a joint declaration denouncing “unilateralism, protectionism, and illegal military interventions.” While the statement did not explicitly name the United States, Trump interpreted it as a veiled attack on American interests.

In recent months, BRICS has gained momentum around efforts to reduce dependence on the U.S. dollar. The bloc has been encouraging trade in local currencies—a process widely viewed as the first step toward “de-dollarization.” This initiative, which Trump previously dismissed as futile, has now drawn his ire.

Earlier this year, he declared BRICS “dead” and warned of 100% tariffs against member countries should they persist in pursuing dollar alternatives.

While BRICS, as an organization, did not issue an official response to Trump’s statement, individual members responded cautiously but firmly.

China’s Foreign Ministry reiterated that BRICS “is not a bloc for confrontation, nor does it target any country.” Spokeswoman Mao Ning added, “Trade war and tariff war have no winners, and protectionism leads nowhere.”

Russia’s presidential spokesman Dmitry Peskov acknowledged Trump’s remarks had been “noticed,” according to Russian state media, but stopped short of offering detailed commentary.

The relative silence from the broader bloc reflects what analysts describe as a strategic effort not to escalate tensions unnecessarily — particularly as many BRICS members, including India, China, and Indonesia, are still engaged in active bilateral trade negotiations with the U.S.

Despite the muted institutional response, Lula suggested Trump’s rhetoric reflected anxiety over BRICS’ rising global profile.

“Some people are getting nervous because BRICS is growing stronger and giving a voice to the Global South,” Lula said.

In a symbolic show of unity, Lula hosted a group photo on Monday that featured not only the 10 full BRICS members but also UN Secretary-General António Guterres, WHO Director-General Tedros Adhanom, and the presidents of Chile, Uruguay, Uganda, and Bolivia, all seen as sympathetic to BRICS or considering closer engagement.

Trump’s Words Stir Global South Calculations

According to Farwa Aamer of the Asia Society, Trump’s posture could complicate decisions for Global South countries weighing whether to align more closely with BRICS.

“Trump’s posture could deter some countries from joining any time soon, especially those looking to maintain stable ties with the U.S.,” Aamer said, adding that most would likely adopt a “wait-and-see approach” rather than engage in open confrontation.

Gustavo de Carvalho of the South African Institute of International Affairs agreed, noting that Trump’s threat “only becomes a real deterrent if the U.S. actually implements aggressive penalties.”

“BRICS members don’t want to be seen as anti-Western. They want to be seen as leading a non-Western alternative,” he said. “It’s about leverage. Trump’s threats give the U.S. room to negotiate better deals with countries that also engage with BRICS.”

Trump’s warning marks the latest flashpoint in the broader geopolitical contest between Washington and an emerging multipolar world. BRICS is increasingly seen not just as an economic bloc, but as a symbol of resistance to Western dominance, a role it continues to embrace — cautiously but deliberately.