An analyst at Wedbush Securities, a leading US financial services firm, has stated that a vast majority of Tesla investors want Elon Musk to focus more on his struggling electric car company rather than national politics.
Dan Ives, a US stock analyst and one of the biggest Tesla bulls, wrote in an investor note published on Sunday that shareholders are starting to feel a “sense of exhaustion” about Musk’s insistence on spending time in politics. He said that the billionaire’s attempt to dive deeper into the political realm to take on the “Beltway establishment” is hurting Tesla investors, who want him to divert attention toward the company during a crucial period.
Elon Musk’s Political Involvement is Hurting Tesla Investors, Claims Analyst
The note came after the Tesla founder announced the formation of a new political party, called the America Party, in response to his public feud with President Donald Trump over the “Big Beautiful Bill”, which the billionaire claims will add $3.3 trillion to the $37 trillion national debt over the next decade and increase the federal debt ceiling by $5 trillion.
“Today, the America Party is formed to give you back your freedom,” Musk wrote in an X after Trump signed the bill on July 4, Independence Day.
In the note, Ives said that Tesla investors were relieved when Musk ended his 120-day term as a special advisor to the President and head of the Department of Government Efficiency (D.O.G.E.) in May. It was good news for shareholders who were worried that Tesla wasn’t getting enough attention from the eccentric billionaire due to his responsibilities.
TSLA stock rose 7% in the week after Musk left the White House, and said that he was back to spending “24/7 at work and sleeping in the office”.
However, that joy lasted a very short time, with the latest announcement taking a “turn for the worse” for the S&P 500 company, he wrote. The analyst added that TSLA shares will likely be “under some pressure” on Monday as investors are worried that Trump will start viewing Musk as more of a competitor than an ally.
“Musk/Tesla does not need to keep poking the bear as Trump can create more hurdles for Musk/Tesla/SpaceX over the coming years,” Ives wrote.
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Trump Argues EV Tax Credit Elimination in the Bill is the Root Cause of Musk’s Anger
Trump responded harshly to Musk’s America Party announcement, stating in a Truth Social post on Sunday that the Tesla and SpaceX founder had gone “completely off the rails” and a third political party has never succeeded in America because the system is not designed to support it.
The President argued that the ex-DOGE chief was angry with the Big, Beautiful Bill because it eliminates the tax incentives for electric car buyers. The legislation, passed by the House of Representatives on July 3, would extend the 2017 tax cuts enacted by the first Trump administration (2017-2021) and make key updates to the tax regime. It would also end the $7,500 EV tax credit awarded to buyers on September 30, 2025.
Removal of the tax credit is expected to dampen demand for electric vehicles, with bigger automakers like Tesla being hit the hardest. As per the new bill, companies that sold more than 200,000 EVs between December 31, 2009, and December 31, 2025, do not qualify for the incentive.
Tesla delivered more than 335,000 vehicles in Q1 2025 alone. Meanwhile, the company’s main rivals, Rivian and Lucid Motors, sold 8,000 and 3,109 units, respectively, paling in comparison.
Last month, Seth Goldstein, an equity strategist at Morningstar, said that the elimination of the EV tax credit would be the “biggest area” that could impact Tesla. He also noted that with increased long-range EV options available to consumers at similar price points as Tesla, it is up to the company to make its case for customers to pay up slightly versus the market. Goldstein added that tax credit elimination could decrease sales volume for the automaker, an area where it has been struggling this year.
JPMorgan analyst Ryan Brinkman wrote in a June investor note that Trump’s bill, combined with other legislations like terminating the California Air Resources Board Program, threatens to eat up more than half of Tesla’s 2025 profits. He said that the $7,500 incentive made up 19% of the company’s 2024 earnings before interest and tax.
Tesla Sold Fewer Cars In Q2 2025 Compared to the Same Period Last Year
Musk’s involvement in US politics, especially the endorsement of Trump, has hit Tesla the hardest. In the first half of this year, the EV maker was faced with massive protests, boycotts, and attacks over its founder’s work with D.O.G.E. Its stock, which has been underperforming so far this year, continues to suffer due to the ongoing feud between Musk and the President.
Last week, the carmaker reported that it sold 384,000 cars in the second quarter, representing a 13.5% decrease from the same period last year.
Despite the negative outcome, investors believe that Musk cannot be replaced as Tesla’s CEO. In June 2024, shareholders approved a controversial $55 billion pay package proposed by the founder, which was viewed as a referendum on his leadership at the company. At the time, there was concern that if the pay package was rejected, then Musk might lose interest in the automaker and divert attention to his other ventures like SpaceX, Boring Company, X, xAI, or Neuralink.
Tesla (TSLA) closed the last trading session on Thursday, July 3, at $315.35, down 0.10% for the day.
