The ongoing Tesla stock decline deepened this week as CEO Elon Musk’s renewed political feud with Donald Trump sent shares spiraling. Tesla Inc. (NASDAQ:TSLA) fell 7% on Monday, extending a rough patch for the EV maker as the company battles both political backlash and global competition.

Musk, once a vocal supporter and donor to Trump, shocked political and market observers by announcing the formation of a third political party. His move came in protest of a Republican spending bill that he claims threatens American innovation and could cost thousands of jobs. The rift with Trump has triggered concerns that Tesla’s political entanglements could disrupt its business operations, especially as the federal government remains a key source of subsidies and regulatory support.

A Political Fallout That Hits Shareholders

In a post over the weekend, Trump lashed out at Musk, claiming he had gone “off the rails.” The response added fuel to investor anxiety, with many fearing retaliatory actions that could hurt Musk’s sprawling business empire, including Tesla, SpaceX, and social media platform X.

Dan Ives, a senior analyst at Wedbush Securities, warned in a note to clients:

“With the autonomous future ahead and the AI revolution in full force, Musk and Tesla do not need to keep poking the bear. Trump can create more hurdles over the coming years if this political battle intensifies heading into the 2026 mid-terms.”

That statement mirrors the growing sentiment on Wall Street — that Tesla’s future could be held hostage by political drama, at a time when the company is already facing serious challenges.

Sales Slump and Mounting Competition

Tesla reported a 13% decline in sales in both Q1 and Q2, despite continued growth in the broader EV market. Analysts attribute part of the drop to consumer backlash against Musk’s controversial political alignments, including his support of far-right figures and parties such as Germany’s AfD.

Meanwhile, legacy automakers like Ford Motor Co. (NYSE:F) and General Motors Co. (NYSE:GM) have been gaining ground. Chinese companies such as BYD and Great Wall are also expanding rapidly, offering advanced EVs with ultra-fast battery charging, often at lower prices than Tesla’s comparable models.

As competitors eat into Tesla’s global market share, the company must also deal with a battered brand image in key regions. Once seen as the pinnacle of innovation, Tesla now faces criticism not just over politics, but also for falling behind on software updates, quality control, and affordability.

Tesla Stock Decline in Numbers

Tesla stock (NASDAQ:TSLA) is down nearly 40% from its all-time high of $479.76 reached on December 17. As of Monday, shares were trading around $289.75, a loss of about $26 per share since Thursday’s close.

The sharp decline has rattled retail investors and institutional holders alike. Many are now questioning whether Musk’s political outspokenness is doing more harm than good for shareholders, especially given Tesla’s dependence on favorable regulatory conditions and consumer trust.

For Tesla to recover from this setback, Musk may need to refocus public attention on innovation, product development, and global expansion, rather than political rhetoric. Analysts believe that Tesla’s upcoming launches — including its long-awaited Cybertruck and next-gen Full Self-Driving (FSD) software — could reignite excitement, but only if the company stabilizes its leadership narrative.

Investors are watching closely. For now, the Tesla stock decline reflects not just financial metrics, but a growing unease over the company’s direction under Musk’s increasingly unpredictable public persona.

As the 2026 midterm elections approach, the intersection of politics and tech will only intensify. And Tesla, like its CEO, may find it hard to stay out of the spotlight — or the crossfire.

Featured Image: Freepik

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