Musk's party scares Wall Street: Tesla's share price plummets

In fact, the performance over the past three months represents well the negative reflection of Musk's political exposure and the repercussions of the deteriorating relationship with the president. Between March and April, the climate around the Texan brand had clearly worsened: protests online and in front of dealerships (#TeslaTakedown) and investor concerns about governance. The stock closed down for seven consecutive weeks. On 30 March, after the very negative first quarter accounts (deliveries -13% year-on-year) strong sales and -6%.

At the end of May Musk announces farewell to the Doge. The market reacts with relief, the CEO is about to return to work: +3%. But on 3 June, Musk attacks the 'One Big, Beautiful Bill', Trump's maxi-tax law cancelling subsidies for electric cars: he calls it a 'disgusting abomination'. A new clash with Trump explodes. The president announces reprisals on federal contracts. On 1 July, Tesla loses over 6% after Trump signs the 'Big Beautiful Bill'. The president attacks Musk, accusing him of depending on public funds. The political break appears final, fuelling fears about federal contracts and new retaliation. Investors react with a sell-off, burning some $20 billion in value. Finally, on 5 July Musk launches the America Party. And Wall Street's response is not long in coming at the first opportunity, on Monday 7 July: Tesla falls from over a trillion in capitalisation to 940.

The fall is just under 30% since the beginning of the year. Tesla is now the worst of the 'Magnificent Seven', the leading companies in the technology sector. And, as mentioned, there are growing fears that personal tensions between Musk and the White House could lead to regulatory or contractual reprisals, even in strategic sectors such as space (with Space X) and artificial intelligence (xAI).

The announcement also turned the spotlight back on internal governance. The board of directors, led by Robyn Denholm, is back in the crosshairs. The chairman had denied rumours of a possible change at the top in May, but pressures are mounting. Azoria Partners, for example, has decided to suspend the launch of an ETF on Tesla, and CEO James Fishback has publicly called for a clear stance from the board on Musk's political involvement.

Ann Lipton, a professor of corporate law at the University of Colorado, summed up the problem neatly: 'In another company, the board would have already considered whether the CEO's conduct was consistent with his role. Tesla, on the other hand, has historically adopted a wait-and-see posture, letting Musk freely manage his external initiatives'.

It is not just a question of symbolic presence. In May, a group of shareholders including New York City pension funds formally demanded that Musk devote at least 40 hours a week to Tesla, signalling fears that the company, while having benefited from its founder's vision, now risks intermittent leadership.

The alarm is borne out by the results. In Q2 2025, Tesla delivered 384,122 vehicles, an improvement over the previous quarter (+14.1%) but still down 13.5% year-on-year. The top models (S, X and Cybertruck) are stationary at 10,394 units, down 52%. Model 3 and Model Y continued to drive the result, but the product mix was depleted and margins suffered.

Meanwhile, Chinese competition accelerates. Not only Byd. The Xpeng-Nio-Li Auto-Zeekr patrol overtook Tesla for the first time in the second quarter, with a lead of 33,000 deliveries. Two years ago, the gap was over 300,000 vehicles in favour of Tesla. The lead is no longer a given. And Musk knows it.

The central question remains the same, and is now being discussed by analysts and investors: is Musk still Tesla's main asset or is he becoming a huge problem? Until now, his ability to drive the electric transition and the future of autonomy has granted him almost absolute freedom. But today, with a product line under pressure, an unfavourable regulatory framework and governance perceived as too weak, tolerance for his political digressions may be at its limits. The risk, for Tesla, is not just of losing focus. It is to lose control.