Musk's involvement in politics raises concerns among investors, Tesla's board may intervene

According to the Zhitong Finance APP, after Musk announced the establishment of a new political party, Tesla (TSLA.US) investors may face another tumultuous week. Analysts pointed out that if Musk continues to engage in politics, Tesla's board may intervene.

On July 5th local time, Musk posted on social media that the "American Party" was established that day and expressed his dissatisfaction with the so-called "Big and Beautiful" tax and spending bill promoted by President Trump.

It is reported that the U.S. House of Representatives passed the "Big and Beautiful" bill on July 3rd local time with a vote of 218 in favor and 214 against. Trump signed the bill into law on July 4th local time, making it effective. The bill has been controversial due to its cuts to federal aid, increases in long-term debt, and tax reductions for the wealthy and large corporations. Musk had previously criticized the bill harshly, stating that if it passed, the "American Party" would be established the next day.

When asked about Musk's announcement of the new political party, Trump stated that Musk "can find some fun in it," but he believes it is "absurd." On July 6th local time, Trump posted on social media that he was saddened to see Musk completely "derailed" over the past five weeks, essentially falling into a "disastrous situation like a train wreck."

As Tesla's delivery numbers declined for the second consecutive quarter, Musk's announcement of the new political party marks an escalation of conflict between him and Trump, further undermining investor confidence in the stock, which has already fallen over 21% this year.

Regarding Musk's announcement of the new political party, Dan Ives, an analyst at Wedbush who has long been bullish on Tesla, stated that this is not the news investors want to hear. Dan Ives pointed out that provoking Trump and the Republican Party is completely contrary to the goal of protecting Tesla's interests.

Dan Ives stated: "Since the dispute with Trump, Musk has now elevated this political game to a whole new level, and we believe this will consume a lot of his valuable time, distracting him from his focus on Tesla, SpaceX, and other companies." "Given the limited political achievements of independent parties in U.S. history, this will be seen as a disruptive (for Tesla) and politically risky gamble for Musk as he enters the fiercely competitive congressional elections of 2026, which will also make investors uneasy."

Dan Ives believes that Musk's involvement in political activities at this juncture is undoubtedly the worst timing for his businesses. Tesla is at a critical stage of launching its highly anticipated autonomous taxi service. Dan Ives and other Wall Street analysts believe this business could bring Tesla hundreds of billions or even trillions of dollars in value. More importantly, Tesla also plans to begin mass sales of humanoid robots in 2026.

After Musk announced the establishment of the new political party, the American investment company Azoria Partners announced on July 5th that it would delay the listing of its Azoria Tesla Convexity ETF. It is reported that Azoria was originally scheduled to launch the Tesla ETF soon, which would invest in the stocks and options of the electric vehicle company Azoria CEO James Fishback also posted several comments criticizing the new political party on social media and reiterated his support for U.S. President Donald Trump. James Fishback stated, "I encourage the (Tesla) board to meet immediately and ask Elon to clarify his political ambitions and assess whether these ambitions align with his full-time responsibilities as CEO of Tesla."

Dan Ives and his team share the same view. They stated that they would not be surprised by the Tesla board's involvement if Musk continues to engage in political interference.

Additionally, some analysts believe that Musk's announcement of forming a new political party may stem from his belief that politics is Tesla's only way forward, as Tesla's rise relies on favorable regulatory policies, making it crucial to advocate for beneficial legislation in areas such as clean energy, robotics, autonomous driving, and artificial intelligence.

It is worth mentioning that since the founding of the United States, there have been instances of parties other than the Republican and Democratic parties making appearances in elections, and they have had opportunities to achieve decent results. However, in recent years, third-party parties have had very limited ability to attract votes in national elections. Musk does not seem to intend to challenge the dominance of the two major parties but instead aims at a small number of key seats in Congress that will be up for election next year, hoping that the new party he creates can become a balancing force in Congress. Musk stated on social media, "Given the very small margin of seats between the two parties in the legislature, this is enough to be the decisive vote on controversial bills, ensuring that the legislation reflects the true will of the people."