Elon Musk has reentered the political arena, and Tesla investors are reacting with concern. On Monday, Tesla’s stock dropped more than 7% following Musk’s renewed public feud with former President Donald Trump and his announcement of a new political party. This development comes just months after Musk had assured shareholders that he would be stepping away from political distractions to focus on the electric vehicle company, which has already faced a challenging year.
Tesla investors and analysts have expressed frustration over Musk’s political involvement. The company’s stock has already declined 22% this year, and some believe that Musk’s attention is needed more than ever at Tesla. William Blair analysts Jed Dorsheimer and Mark Shooter wrote in a note on Monday, “We expect that investors are growing tired of the distraction at a point when the business needs Musk’s attention the most and only see downside from his dip back into politics.” Tesla shareholder Ross Gerber also criticized Musk’s actions, saying that “no one wants the Elon First party” and accusing Tesla’s board of failing to hold him accountable.
Musk announced the creation of a new political group, the “America Party,” via a post on X, on July 4, following a poll he shared where 65.4% of respondents supported the idea. Although Musk, as a foreign-born U.S. citizen, cannot run for president himself, he can back third-party candidates. These candidates face a steep path to ballot access in all states and rarely see major electoral success. Musk’s post declared: “Today, the America Party is formed to give you back your freedom,” citing the poll as his mandate.
Experts remain skeptical about the viability and impact of Musk’s new party. Carl Tobias, Williams chair in law at the University of Richmond, noted that Musk has provided few details on his political vision and that third parties have rarely succeeded in U.S. history. At the same time, Dafydd Townley, a U.S. politics expert at the University of Portsmouth, warned that the new party would likely split the Republican vote, potentially benefiting Democrats in the House of Representatives due to the winner-takes-all nature of the electoral system.
The response to Musk’s announcement on X was met with widespread criticism, prompting him to address some of the backlash directly. “The America Party is needed to fight the Republican/Democrat Uniparty,” he wrote in reply to a post featuring a graphic that showed how U.S. debt has steadily increased, no matter which party is in power. But what do these numbers actually reveal?
To better understand this issue, we first need to examine the Gross Federal Debt as a percentage of GDP across different presidential terms. During World War II, the debt reached 53.3%, and by 1945, at the war’s end, it had spiked to 114.9%. In the 2008 financial crisis, it stood at 67.5%, and by the end of President Obama’s term in 2017, it had climbed to 104.3% (the Gross Federal Debt is the total amount of money the U.S. government owes. It includes all debt issued by the Treasury, regardless of who owns it. Gross Federal Debt = Public Debt + Intragovernmental Debt).
Under President Trump, the debt continued to rise without any reversals, starting at 104.3% and increasing to 126.2% by the end of his administration. During President Biden’s term, the trend slightly reversed. The debt percentage decreased from 126.2% to 123.4%, and eventually to 122.2% by the end of his presidency.
While no recent administration has significantly reduced the federal debt, these figures suggest that fiscal patterns are driven more by global and domestic economic forces than by party affiliation. Musk’s political entry may be framed as a response to this stagnation, but to shareholders, it remains a costly distraction from Tesla’s real challenges.
