Digital Team Tesla (TSLA) shares dropped sharply Monday, falling over 7% by mid-morning, after a whirlwind weekend in which CEO Elon Musk announced the formation of a new political party and U.S. policies eliminated key electric vehicle incentives. The decline comes at a pivotal time for Tesla, which is facing weakening demand in key global markets, declining EV subsidies, and intensifying competition—especially in China. Musk forms “America Party” On Saturday, Musk posted on X (formerly Twitter) that he is launching the “America Party” after polling his followers on the need for political alternatives. “We live in a one-party system, not a democracy,” he wrote. “Today, the America Party is formed to give you back your freedom.” Market analysts see the announcement as a distraction from Tesla’s core business. “Musk diving deeper into politics is exactly the opposite direction that Tesla shareholders want him to take,” said Dan Ives, tech analyst at Wedbush. This political move follows Musk’s previous resignation from the Trump-aligned Department of Government Efficiency (DOGE), which investors initially viewed as a positive for Tesla’s focus. EV tax credits repealed The blow to Tesla wasn’t limited to Musk’s political maneuvering. Over the weekend, President Trump signed a sweeping tax bill that eliminates the $7,500 federal EV tax credit after September 30, 2025. That law also: