Tesla’s Stock Plunges After Political Pivot

On July 7, 2025, Tesla stock took a nearly 7% nosedive following Elon Musk’s announcement that he plans to launch the “America Party” — a self-styled third-party political movement in the U.S. This single disclosure erased over $68 billion in market value within a trading day

Wedbush Securities’ long-time bull Dan Ives responded sharply. He argued Musk’s increased political entanglements are “exactly the opposite direction that Tesla investors/shareholders want him to take” during a pivotal period for CEO succession planning and product rollouts

‘Soap Opera’ Distracts from Tesla’s Core Mission

In a widely quoted internal memo, Ives pleaded with Tesla’s board to end what he termed the “soap opera.” He insisted the board “must act and create ground rules for Musk”, warning that political distractions threaten the company’s ambitious advances in autonomous driving, AI, and robotics

He pointed to Tesla’s stock underperformance — down some 21% year-to-date — despite a 22% rebound in Q2, as a clear sign that investors are warier than ever of Musk’s political activities

Code Red: Brand Crisis and Eroding Demand

Ives had previously declared Tesla in “code red” territory. Since Musk assumed an advisory role in Trump’s Department of Government Efficiency (DOGE), Tesla has increasingly been perceived as a political symbol — a perception analysts blame for protests, vandalism at dealerships, declining sales, and brand damage

He quantified this risk: a permanent 15–20% drop in future demand, brought on by a polarizing CEO turning his focus away from Tesla’s mission

Investor Pressure: ETF Halted, Board Criticized

Financial stakeholders echoed the alarm. Azoria Partners delayed launching a Tesla-indexed ETF, stating Musk’s political games “create a conflict with his full-time responsibilities as CEO. Separately, a Trump supporter and Tesla investor wrote to Chair Robyn Denholm urging an emergency board meeting to reassess Musk’s ambitions

Three-Point Fix Proposed by Ives

Ives laid out a clear proposal aimed at refocusing Musk:

New pay structure – Tying Musk’s compensation to time spent at Tesla and providing up to 25% voting rights.

Time guardrails – Defining his commitment to Tesla.

Dedicated oversight committee – To monitor overlaps between his political ventures and CEO duties

These proposals align with an “at‑least‑five‑year” vision for Musk to steer Tesla through its crucial next phase in AI and autonomous vehicles

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Musk’s Response: “Shut up, Dan”

Musk’s reaction? Quick and blunt. Via X, he replied: “Shut up, Dan”. Conservative media celebrated the quip, but analysts saw the response as evidence of escalating tension between Musk and the investment community.

Ongoing Legal and Governance Issues

The friction comes amid Musk’s ongoing $56 billion pay package saga, struck down in 2024 and currently under legal appeal. Critics argue this signals a broader governance failure, fueling investor doubt

The Stakes: AI, Robotaxis, and Reputation

Tesla’s future hinges on three pivotal fronts:

Autonomous vehicle rollout – especially the planned 2026 robotaxi fleet.

Affordable EV model – a lower-cost option to expand market reach.

AI & robotics leadership – areas central to Tesla’s long-term premium

Ives underscored: “Tesla is Musk and Musk is Tesla… if he continues down this path, that’s where you have permanent brand damage”

What Happens Next?

Board action? Ives warned of eventual board intervention if Musk continues. So far, the board has remained silent

Regulatory spotlight: Investors expect stricter disclosure and tighter oversight, especially if political distractions hamper execution.

Investor patience: Wedbush maintains a “Buy” rating with a $500–$550 target — but resets depend on Musk’s renewed operational focus

✍️ Final Takeaway – A CEO at War with Himself

Dan Ives, once Tesla’s biggest advocate, now issues a stern warning: Elon Musk’s political distractions are no longer benign quirks—they’re a direct threat to Tesla’s growth and investor confidence. The solution? Clear boundaries, a laser focus, and defined accountability.

If Musk truly wants Tesla to chart the future — through AI, robotaxis, and affordable EVs — it’s time to choose: president or CEO, not both.