Tesla Stock Sinks as Trump-Musk Alliance Crumbles Amid Political Upheaval
So here’s what’s happening right now — and it’s a major shake-up. Elon Musk and Donald Trump, once politically aligned and even appearing inseparable during the early months of Trump’s second term, have now completely severed ties. And the fallout? It's rattling Tesla’s stock and sending shockwaves through both Wall Street and Washington.
Over the July 4th weekend, Musk made headlines by announcing the formation of a new political entity: the “America Party.” It's a bold move aimed at breaking away from the traditional Republican-Democrat system. Musk didn’t just propose a new path — he came out swinging. He criticized both major parties as a “Uniparty” and accused them of serving the same elite interests. On social media, he posted memes, called out systemic corruption, and reignited old conspiracy theories, including fresh claims about Jeffrey Epstein and alleged government cover-ups.
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The trigger for this political divorce was Trump’s new domestic spending bill — a sweeping, controversial package Musk had lobbied against heavily. As head of the Department of Government Efficiency (DOGE), Musk had tried to reduce federal spending. But once the bill passed, Musk openly called it a “disgusting abomination.” Trump, in turn, labeled Musk a “train wreck” and dismissed his third-party ambitions as a “confusing and ridiculous” idea.
Now here’s where it gets interesting: Musk, who was once the top donor behind Trump’s 2024 campaign and reportedly shelled out close to $300 million, is taking a completely different route. Instead of trying to compete nationwide, he wants to focus on a few key Senate and House races — enough to disrupt the legislative balance and become a political kingmaker. In his words, “Extremely concentrated force at a precise location on the battlefield.”
Tesla, unfortunately, isn’t immune to all of this. As investors absorb the implications of Musk's increasingly erratic political engagement and Trump’s threats to investigate his federal contracts, Tesla stock has taken a hit. The uncertainty over Musk’s focus — shifting from CEO to political agitator — is making markets nervous. And given how much of Tesla’s valuation is tied to Musk’s leadership, any perception of distraction sends the stock tumbling.
Adding to the intrigue, Musk has also reconnected with Andrew Yang, the former presidential candidate who founded the Forward Party. They reportedly spoke about strategies for building an alternative political movement, suggesting that Musk’s plans may be more serious than many initially thought.
For now, Musk still follows Trump and some administration figures on X, but that might just be digital residue. Publicly, the bromance is over. And whether Musk’s America Party has legs or fizzles out like so many third-party dreams before it — it’s already made waves. In politics. In business. And definitely in the markets.
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