Tesla stock tanks after Trump dismisses Musk’s new political party plan and calls him ‘off the rails’

Shares in Tesla plunged 6.79% Monday after its CEO Elon Musk said he is forming a new American political party, provoking an irate response from President Donald Trump.

Shares in Tesla (TSLA) had dropped as much as 7.6% in premarket trading. The stock pared some of its earlier losses but still posted its biggest single-day loss since June 5, when Musk and Trump traded barbs on social media.

Tesla short sellers made roughly $1.6 billion in profit on Monday, according to data from analytics firm ORTEX.

“I’m saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks,” Trump wrote on his Truth Social platform late Sunday, also mentioning Musk’s Saturday announcement that he is forming a political party to rival the main Republican and Democratic parties.

Ahead of boarding Air Force One in New Jersey Sunday, Trump also called Musk’s announcement “ridiculous” and said it would sow confusion.

Reversal of fortune

Tesla’s fortunes have taken a turn in recent months as it has grappled with intensifying competition from rival EV makers and the fallout from Musk’s foray into US politics.

Last week, the company reported a record fall in second-quarter sales, selling 13.5% fewer vehicles compared with the same period in 2024. For that year, Tesla has also reported itsfirst-ever annual decline in sales as a public company. The drop was small — around 1% — though it marks a striking turnaround for an automaker historically accustomed to robust sales growth.