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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.

India Rebukes X Over “Tom, Dick, and Harry” Remark in Ongoing Court Battle on Content Takedowns

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A legal clash between Elon Musk’s X (formerly Twitter) and the Indian government intensified on Tuesday after X’s lawyer made a controversial remark suggesting that “every Tom, Dick, and Harry” government official could issue takedown orders on online content. The statement drew a sharp and immediate rebuke from India’s Solicitor General Tushar Mehta, escalating a long-standing standoff over digital content regulation.

The remark came during a hearing at the Karnataka High Court, where X is challenging a government-run website that it alleges serves as a “censorship portal.” The Indian government, however, defends the portal as a tool for swiftly notifying social media platforms of legal obligations under content moderation laws.

X’s lawyer, K.G. Raghavan, cited a recent example where the Indian Railways ordered the takedown of a video showing a car being driven on a railway track—content X considered newsworthy. “This is the danger… if every Tom, Dick, and Harry officer is authorised,” he argued.

Solicitor General Mehta strongly objected, stating, “Officers are not Tom, Dick, or Harry… they are statutory functionaries.” He further defended India’s regulatory approach, saying, “No social media intermediary can expect completely unregulated functioning.”

The Indian Information Technology Ministry and X did not issue public responses to Reuters’ inquiries following the courtroom exchange.

India has become a strategically important market for Musk’s expanding empire, particularly with upcoming plans to launch Starlink and Tesla in the country. However, X’s friction with Prime Minister Narendra Modi’s administration over content moderation continues to cast a shadow over those ambitions.

The roots of the conflict trace back to 2021, when X refused to comply with Indian orders to block specific tweets. Although it eventually yielded to the demands, the platform has continued to contest the legality of those directives in Indian courts.

Tuesday’s court exchange underscores the ongoing tension between tech giants and sovereign governments over who has the final say in regulating online content—and how far that power should extend.

Elon Musk’s xAI Secures $10 Billion in Funding for AI Expansion, Morgan Stanley Confirms

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Elon Musk’s artificial intelligence venture, xAI, has successfully raised $10 billion—split evenly between debt financing and strategic equity investment—as it ramps up efforts to scale infrastructure and compete in the intensifying AI arms race, Morgan Stanley confirmed Monday.

According to a statement posted on X, the $5 billion in debt funding includes a mix of secured notes and term loans and was oversubscribed, drawing in prominent global debt investors. Meanwhile, xAI also completed a separate $5 billion equity raise, with Morgan Stanley describing the capital as “strategic”—a likely reference to targeted investments from industry or institutional players.

Earlier reports by Reuters indicated that xAI was on track to finalize the debt round despite tepid early interest. Bloomberg had separately reported that the AI firm was also pursuing an additional $4.3 billion equity round on top of the debt raise, and had even floated a potential $20 billion equity raise that could push the company’s valuation as high as $200 billion. Current investor estimates place xAI’s valuation at over $120 billion.

The new funds will support the development of AI models, the expansion of data center infrastructure, and growth of xAI’s flagship Grok platform, a generative AI chatbot positioned to rival OpenAI’s ChatGPT and Google’s Gemini.

xAI has not issued a public statement, and declined to comment when contacted by Reuters outside of business hours.

The massive funding round highlights investor confidence in Musk’s ability to build a major player in the AI space, leveraging assets across his business empire, including Tesla, SpaceX, and X (formerly Twitter).