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Tesla Shares Drop Nearly 8% as Elon Musk’s ‘America Party’ Sparks Investor Concern

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Tesla’s stock fell close to 8% on Monday amid mounting investor worries over CEO Elon Musk’s new political venture, the so-called ‘America Party,’ which raises doubts about his focus on the company’s future. The announcement came shortly after a public clash with former President Donald Trump, who dismissed Musk’s political move as “ridiculous” and threatened to cut subsidies worth billions to Musk’s companies, escalating a feud that previously erased $150 billion from Tesla’s market value in a single day.

Tesla’s shares have already dropped 35% since their record high last December, making it the worst-performing stock among the high-profile “Magnificent Seven” tech firms this year. The company also reported its second consecutive quarterly decline in vehicle deliveries, intensifying pressure on its stock.

Investors voiced frustration over Musk’s political distractions. Shawn Campbell, adviser at Camelthorn Investments, said, “I and every other Tesla investor would prefer to be out of the business of politics. The sooner this distraction can be removed and Tesla gets back to actual business, the better.”

Tesla now faces a challenging sales target, needing to deliver over one million vehicles in the second half of the year to avoid another annual sales decline amid ongoing tariff-related economic uncertainty and fallout from Musk’s political involvement. Should losses persist, Tesla could see its market valuation shrink by over $80 billion, while short sellers stood to gain about $1.4 billion on Monday alone.

Tesla Board Under Scrutiny

Musk’s political ambitions have also put Tesla’s board of directors under the spotlight. Despite rumors of potential leadership changes, board chair Robyn Denholm denied any plans to replace Musk. However, some investors, such as Azoria Partners, have expressed concern. Azoria delayed launching a Tesla ETF, with CEO James Fishback stating the board must assess whether Musk’s political role is compatible with his CEO responsibilities.

Tesla’s board has faced criticism for lacking firm oversight of Musk, who manages five other companies alongside Tesla and now a political party. Ann Lipton, a business law professor, argued, “This is exactly the kind of thing a board of directors would curtail — removing the CEO if he refused to curtail these kinds of activities.”

Despite Musk’s dominant shareholder status, the board has the authority to replace him without a shareholder vote, though such a move remains unlikely given their historical support. Lipton added, “The Tesla board has been fairly supine; they have not… taken any action to force Musk to limit his outside ventures, and it’s difficult to imagine they would begin now.”

Impact on Broader EV Market

Tesla’s stock movements heavily influence the entire electric vehicle (EV) sector. Shares of smaller EV makers Rivian and Lucid also fell around 3.5%. Analyst Craig Irwin of Roth MKM said, “Tesla is the umbrella stock for the EV space. Generally, EV stocks price up into the Tesla valuation.”

The impending expiration of the EV tax credit subsidy at the end of September (earlier than previously expected) is also expected to dampen near-term EV sales, affecting all automakers in the segment, noted Morningstar analyst Seth Goldstein.

Nissan Eyes Foxconn EV Production to Prevent Oppama Plant Closure

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Japan’s Nissan Motor is reportedly in talks with Taiwan’s Foxconn to allow the electronics giant to manufacture electric vehicles (EVs) at Nissan’s Oppama plant in Yokosuka, south of Tokyo. This move could potentially save the factory from closure amid Nissan’s broad restructuring efforts.

Background:

Nissan CEO Ivan Espinosa announced plans to restructure the company, including closing seven out of 17 factories worldwide and cutting the workforce by roughly 15%. The Oppama plant, which employs about 3,900 workers, was among those considered for shutdown.

Potential Deal:

  • Allowing Foxconn to produce EVs at Oppama could help avoid the plant’s closure, preserving jobs and supporting local suppliers.

  • Foxconn is also reportedly considering acquiring a portion of the Oppama facility.

  • In May, Mitsubishi Motors, Nissan’s junior partner, signed a memorandum with a Foxconn subsidiary for Foxconn to supply an EV model.

Official Statements:

Nissan said the Nikkei report on the talks was not based on information officially released by the company. Foxconn did not respond to requests for comment.

Xiaomi Faces Backlash as YU7 EV Buyers Confront Year-Long Delivery Delays

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Buyers of Xiaomi’s new YU7 electric SUV are voicing growing frustration after being told they may have to wait up to 60 weeks for delivery, despite paying a non-refundable deposit. The smartphone giant turned automaker received around 240,000 orders for the YU7 in the first 18 hours after sales opened last Thursday, but only a limited number of vehicles were available for immediate delivery.

By Tuesday, Xiaomi’s official app indicated wait times of 38 to 60 weeks, Reuters confirmed. More than 400 customer complaints have since been filed on the Sina Black Cat consumer complaint platform, with many saying they were unaware of the lengthy wait until after confirming their orders. Customers paid 5,000 yuan ($698) upfront and are now demanding refunds, citing concerns about EV tax exemptions expiring by year-end.

Xiaomi has not publicly responded, but CEO Lei Jun said he would address customer concerns in a livestream event on Wednesday via Weibo, where he has nearly 27 million followers.

The backlash mirrors earlier issues with Xiaomi’s first EV, the SU7 sedan, which debuted in March 2024. Though SU7 buyers initially faced seven-month delays, the car eventually outsold Tesla’s Model 3 in China from December onward. However, the SU7 brand image was hit by a fatal crash in March, and since then, Xiaomi has also faced complaints about unclear delivery schedules and optional feature configurations.

The YU7, Xiaomi’s second EV, is priced from 253,500 yuan ($35,360) — nearly 4% cheaper than Tesla’s Model Y, the best-selling SUV in China. Xiaomi has made clear its ambition to directly challenge Tesla’s dominance in China’s EV market.

To meet demand, Xiaomi is scaling up production at its Beijing factory, raising monthly output from 4,000 units in March 2024 to 28,000 in May, and is preparing to expand to two new factory sites nearby.

Still, unless transparency improves and production catches up, Xiaomi risks damaging its EV reputation — especially at a time when consumer trust and timely delivery are becoming major differentiators in China’s competitive electric vehicle landscape.