Tesla is in focus as CEO Elon Musk doubles down on politics, vowing to form a new America Party. TSLA stock was sharply lower early Monday.
Musk's political move followed President Donald Trump signing into law his huge tax-and-spending bill, which eliminates key tax credits for the electric vehicle giant. Also over the weekend, a Tesla robotaxi brushed a parked car.
Musk announced Saturday on his social site X that he is forming the "America Party" after polling his followers. "When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy," he wrote. "Today, the America Party is formed to give you back your freedom."
Musk doubling down on politics, after recently vowing to step back, is not what Tesla bulls want to hear, according to Wedbush analyst Dan Ives.
"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," Ives wrote in a Sunday note. "While the core Musk supporters will back Musk at every turn no matter what, there is broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track."
Musk risks alienating Trump supporters after turning off Tesla's core customers in the U.S. and Europe with strong Trump support in 2024, his DOGE work earlier this year and various political statements over the past year or two.
President Trump wrote Sunday on his Truth Social site, "I am saddened to watch Elon Musk go completely 'off the rails,' essentially becoming a TRAIN WRECK over the past five weeks." He added that a third political party has never succeeded in the U.S.
Tesla Loses EV Tax Credits
Musk had reignited his feud with Trump in recent days over the president's budget, with the billionaire arguing that it will increase federal debt substantially. He's also signaled opposition to the legislation's repeal of green energy tax credits.
The newly signed legislation ends the $7,500 U.S. EV tax credit after Sept. 30. Tesla will likely see a big jump in U.S. sales in the third quarter, pulling forward demand before the tax credits expire. But after that U.S. sales will likely tumble.
Meanwhile, the Trump budget immediately scrapped highly profitable zero emission credits in the U.S. Other automakers would buy ZEV credits from Tesla to meet emission standards.
In the first quarter, Tesla would have had an operating loss without its ZEV credits. Tesla will still get emission credits in Europe and China, but its plunging European sales and sliding China demand will hit those revenue sources.
Meanwhile, Trump tariffs have sharply raised the cost of imported Chinese batteries for Tesla Energy.
Trump had campaigned on these issues, so these policies aren't really a surprise.
Futures Due With Trump Tariffs, Tesla Stock In Focus
Tesla Robotaxi
Most Tesla robotaxi rides in Austin, Texas, have gone smoothly. But, even with human supervision, there have been a few incidents. That includes a robotaxi recently brushing a stationary Toyota Camry while trying to park.
Tesla bulls hail the overall robotaxi effort. But the EV giant likely will need to remove the safety monitors and significantly expand the number of robotaxis and where they operate before convincing many others.
Since the limited robotaxi launch in Austin, Texas, on June 22, Tesla stock is down 2.1%. Clearly a number of headlines beyond robotaxis are swirling around TSLA stock, including better-than-feared Q2 deliveries. But Uber Technologies, seen as an inverse play to Tesla's robotaxi efforts, has rallied 11.8% to 93.63 since June 22. Uber stock cleared an early entry on June 24 and just broke out Thursday from a flat base. Mobileye has shot up 29.6%, with the driver-assist systems maker clearing an early entry.
More broadly, over this span the S&P 500 and Nasdaq are up 5.2% and 5.9%, respectively, both hitting record highs.
Tesla Stock Sharply Lower
Tesla stock tumbled 6.8% early Monday to around 294.
Shares rallied from late April to late May in part because Musk said he was backing away from politics and the Trump administration. TSLA tumbled on the Musk-Trump feud, rebounded as they defused tensions, then skidded again as Musk and Trump renewed their war of words.
Last week, Tesla stock fell 2.6% to 315.35, just between the 200-day and 50-day lines. Shares could be close to forging a new base.
The July 1 low of 293.21 is a short-term level to watch. So is the June 5 low of 273.21.
One final piece of Tesla news: The Xiaomi YU7 began deliveries on Sunday. The crossover, which got 200,000 orders in three minutes, is seen as a major threat to the Tesla Model Y in China. Xiaomi's first EV, the SU7 sedan, outsells the Model 3 in China.
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