Political ambitions reignite concerns over CEO’s focus amid declining Tesla sales
Tesla shares plunged nearly 8% on Monday, following Elon Musk’s surprise announcement of his new political venture—the America Party. While Musk has always been known for bold moves, this one is hitting a raw nerve with Tesla investors, many of whom fear it’s yet another distraction from an already strained company struggling to rebound from two consecutive quarters of falling deliveries.
Political Storm Sparks Investor Unease
Over the weekend, Musk publicly introduced the America Party, fueling tensions with former ally Donald Trump, who criticized the idea as “ridiculous.” Their escalating feud, which included threats by Trump to revoke federal subsidies that benefit Musk’s businesses, exploded across social media, drawing unwanted political spotlight onto Tesla.
This comes at a time when Tesla can least afford it. With sales slumping and the stock already down 35% since December, investors were hoping for sharper focus from leadership—not more headlines.
Wall Street Reacts: Market Cap Takes a Hit
The fallout was swift. If the current losses hold, Tesla is set to lose over US$80 billion in market value. Meanwhile, traders betting against the stock are poised to gain approximately $1.4 billion in paper profits in just one day.
“Every Tesla investor I know wants this political detour to end,” said Shawn Campbell of Camelthorn Investments. “Tesla needs its CEO in the driver’s seat—not distracted by side ventures.”
Musk’s Role as CEO Faces New Scrutiny
The bigger question now hovers over the Tesla board. With Musk running six companies and now launching a political party, his role as Tesla CEO is under sharper scrutiny.
Back in May, Tesla board chair Robyn Denholm denied reports that directors were considering replacing Musk. However, the board’s silence since this political development is fueling speculation.
Azoria Partners, which had plans to launch a Tesla-focused ETF, has now postponed the initiative. Its CEO, James Fishback, issued a direct call to the board: “It’s time they evaluate whether Elon’s political ambitions align with his duties to Tesla.”
Legal Experts Weigh In
Experts argue that the Tesla board has both the authority and responsibility to act if the CEO’s behavior conflicts with shareholder interests.
“This is exactly the kind of thing a well-functioning board would step in to manage,” said Ann Lipton, professor of business law at the University of Colorado. “But Tesla’s board has repeatedly shown deference to Musk.”
Indeed, Musk is Tesla’s largest individual shareholder, but legal experts like Xu Jiang from Duke University note that the board doesn’t require a shareholder vote to replace a CEO. Still, the move seems improbable given the board’s past actions—or lack thereof.
Investor Patience Wears Thin
For Tesla, whose brand and valuation are closely tied to Musk’s identity, the stakes are incredibly high. If the board remains passive, investor confidence could continue to erode.
Musk’s supporters argue that he has always balanced multiple ventures—from SpaceX to Neuralink—while critics say his increasingly political persona is damaging Tesla’s reputation and focus at a critical time.
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