Tesla shares fell by almost 7 per cent in premarket trading on Monday following CEO Elon Musk's announcement of plans to establish a new US political party, raising worries among investors about his dedication to the future of the electric-vehicle company. Musk, the ex-leader of the Department of Government Efficiency (DOGE), introduced the 'America Party' on Saturday, expressing his dissatisfaction with President Donald Trump's 'One Big, Beautiful Bill'. Musk's recent action escalates his feud with Trump and follows Tesla's second consecutive drop in deliveries, eroding investor confidence in the stock, which has declined by over 21 per cent this year. Trump and Musk engaged in a heated social media feud in early June over the tax bill, with the US president warning of potential cuts to Musk's government contracts and subsidies. "Investors are worried about two things – one is more Trump ire affecting subsidies and the other, more importantly, is a distracted Musk," said Neil Wilson, UK investor strategist at Saxo Markets. Musk, who invested almost $300 million supporting Trump and other Republicans in the previous year, announced in May that he would reduce his political spending and continue as Tesla CEO for another five years. This move was intended to address investor worries about his priorities and connections to the government. "Investors had cheered Musk stepping back from frontline politics but are now worried he's going to (get) sucked back in and take his eye off Tesla," Wilson added. Investor concerns began to emerge shortly after Musk's announcement, as investment firm Azoria Partners decided to postpone the launch of a Tesla exchange-traded fund, according to a post by Azoria CEO James Fishback on X. Trump criticised Musk's idea to create the "America Party" as "ridiculous," citing a potential conflict of interest with Musk's space business due to his ally's NASA leadership appointment. Attribution: Reuters Subediting: M. S. Salama
