To The Moon

Tesla, Robotaxi & "America Party"

Elon Musk is currently at the center of several major developments:

(1) Tesla faces negative press regarding its upcoming Q2 2025 earnings, with analysts predicting a significant drop in profits and vehicle deliveries down -13.5% YoY.

(2) Robotaxi launch in Austin has drawn regulatory scrutiny after videos showed vehicles making dangerous errors, including driving on the wrong side of road and abrupt stops. The National Highway Traffic Safety Administration (NHTSA) is actively investigating these incidents.

(3) Launched a third political party, the "America Party," positioning it as an alternative to the Republican and Democratic parties. This move follows a public fallout with Donald Trump over federal spending and policy directions.

Musk's Motives

1. Smoke Screen for Tesla's Woes?

• Timing: The announcement of the America Party comes just as Tesla prepares to report what is widely expected to be another disappointing quarter. The robotaxi regulatory issues have also put additional pressure on Tesla's public image.

• Media Attention: Musk's political move has dominated headlines, shifting some focus away from Tesla's operational & regulatory challenges.

• Pattern: Musk has a history of making bold, attention-grabbing moves during periods of negative press for his companies. This can sometimes redirect public and investor focus, at least temporarily.

2. Sincere Attempt to Disrupt US Politics?

• Public Statements: Musk has framed the America Party as a response to widespread dissatisfaction with the 2-party system, citing a poll on his social platform X where users overwhelmingly supported the idea of a new party.

• Personal Motivation: The move followed a very public rift with Trump, who had previously counted Musk as a major donor and political ally. Musk's criticism of recent government spending and his own appointment (and subsequent resignation) from the Department of Government Efficiency (DOGE) suggest personal & ideological motivations.

• Third-Party Viability: Political analysts note that while most third-party efforts in the US have failed, Musk's high profile and resources could allow him to disrupt select races, especially if he targets issues neglected by both major parties.

Weighing Evidences.

• Distraction vs Disruption: There is evidence for both motives. The timing and scale of Musk's political announcement certainly help distract from Tesla's current troubles, but the depth of his conflict with Trump and the ideological framing suggest he is also personally invested in the America Party's success.

• "Con" by fans ? Is it foolish to start a new party just because the poll in X (formerly Twitter) indicated majority wanted an alternative ? Did Musk verify whether the supporters are US citizens ? Hasn’t the purchase of Twitter been a painful learning lesson for the amount of sh*t, Mr CEO has gotten himself into ?

• Investor Impact: Despite the controversies, some analysts remain bullish on Tesla's long-term prospects, indicating that the market is not entirely swayed by Musk's political theatrics.

The America Party.

Immediate Market & Investor Reactions.

• $Tesla Motors(TSLA)$ plunged -7% to -8%, immediately after Musk’s announced the formation of the America Party, reflecting investor anxiety over his renewed political focus at a time when Tesla is already facing declining sales & increased competition. (see below)

• Although shares have recovered “marginally” on 08 Jul 2025, that was largely due to overall market in-tandem recovery.

• As for Wed, 09 Jul 2025, pre-market indicator is showing decline again.

• Analyst sentiment is negative: Many analysts and investors believe Musk’s political ambitions are a distraction, especially as Tesla’s vehicle deliveries have dropped for 2 consecutive quarters and its robotaxi launch faces regulatory scrutiny.

• Investor fatigue: There is a growing sense of exhaustion among Tesla shareholders who want Musk to focus on the company’s operational challenges rather than political battles.

Impact on Tesla

• Brand and sales risk: Musk’s political activities have already alienated some liberal-leaning consumers, a key demographic for electric vehicles, contributing to slumping demand and falling resale values for Teslas.

• Potential loss of government support: The public feud with President Trump has raised concerns that Tesla could lose access to federal subsidies and contracts, that are vital for its bottom line.

• Leadership distraction: Analysts fear Musk’s divided attention could further hinder Tesla’s execution on critical initiatives, such as (a) robotaxi rollout and (b) recovery from recent profit declines.

Impact on SpaceX and Other Businesses

• Government contracts at risk: SpaceX and other Musk-led ventures depend heavily on U.S. government contracts. Political rift with Trump and the Republican Party could jeopardize these relationships, especially if Musk’s new party siphons votes away from the GOP in key districts.

• On 07 Jul 2025, both $Destiny Tech100 Inc(DXYZ)$, a closed end fund (CEF) and $ERShares Private-Public Crossover ETF(XOVR)$ - both with shares in SpaceX fell, although the former managed to recover some lost grounds, thereafter.

• Reputational spillover: SpaceX’s reputation as a non-partisan innovator could be tarnished if Musk’s political activities become more controversial, potentially complicating future partnerships or regulatory approvals.

• Management bandwidth: Musk’s attention is a finite resource. Increased involvement in politics means less time for strategic oversight of SpaceX, Neuralink, and his other companies, which could slow innovation or execution.

Is It a Wise Move?

• High risk, uncertain reward: Historically, U.S. third-party political efforts have failed to achieve lasting influence. The America Party faces steep structural hurdles and could further polarize Musk’s public image.

• Strategic distraction: Most analysts and investors see this as an unwise move for Musk’s business interests. The timing, amid Tesla’s operational struggles and regulatory scrutiny, amplifies the risk.

• Potential upside: If Musk succeeds in influencing policy or swaying key legislative seats, he could shape a more favorable regulatory environment for his companies. However, this is highly speculative and comes at significant cost to shareholder confidence and brand stability.

Conclusion:

Musk’s launch of the America Party is widely seen as a high-risk, poorly timed move that threatens to distract from urgent business challenges at Tesla and potentially jeopardize government relationships crucial to SpaceX and other ventures.

Market reaction and analyst consensus suggest this is an unwise move for his business empire at this critical juncture

If the real intention is to strategically distract the public from Tesla's current challenges, the timing is advantageous for shifting headlines away from Tesla's earnings and regulatory woes.

Regardless, listed stock -Tesla is still affected and may fall further, especially if “The American Party” concept crystalizes. Tesla investors, hold on tight, its gonna be a bumpy ride !

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• Do you think Musk will be able to successfully form an alternative political party?

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