Tesla Paid for Elon’s Politics: Will America Party Turn the Page?

For Elon Musk, the first half of 2025 was a lesson in political vulnerability. By pushing for the Department of Government Efficiency (DOGE), which revealed that the media space is largely a top-down engineering project, Musk mobilized political activism against himself.

Specifically, he activated the same nodes of influence that boasted of having a “Shadow Campaign that Saved the 2020 Election”. This eventually escalated into street-level violence, as the most effective way to devalue Musk’s most prized asset, the publicly traded Tesla (NASDAQ:TSLA).

And even though the FBI formed a task force to counter attacks against Tesla car owners, a portion of the judicial system revealed itself to also be aligned with political networks, as evidenced by the dismissal of charges against a Tesla vandal in Minneapolis.

All of this signaled Elon Musk to exit the political sphere to prevent further erosion of the Tesla brand. He did so in a showy manner, releasing his own signal that the Trump-Musk alliance is over, muting the potential of political mobilization in the process.

Now that Elon Musk is talking about the establishment of the “America Party”, how should investors think of Tesla’s standing? Does it represent deeper engagement in politics or something else?

“America Party” as a Leverage Mechanism

On June 5, Elon Musk announced that “the America Party is formed to give you back your freedom.” In the present 119th Congress, there are no independents in the U.S. House of Representatives. This is an artifact of the first-past-the-post electoral system in which there are no prizes for finishing second or third.

Duverger’s law explains that such a voting system incentivizes voters to strategize in order to prevent their votes from being wasted, entrenching the two-party political system in the process. In turn, this creates a polarization feedback loop, which is at an all-time high level.

In such a climate, voters are more in line to think of politics as a survival issue rather than something on the periphery that can be experimented with. Suffice to say, this makes it extremely difficult for third parties to gain any traction. One could even speculate that the theatrical conflict between Democrats and Republicans is specifically designed for such a purpose.

However, with this readily available data, Elon Musk could turn the American Party into a leverage mechanism. Case in point, the recently formed Restore Britain is not a party per se, but a broad platform to influence the entire political landscape.

In the same vein, the America Party could influence U.S. politics by acting as a mobilizing funnel for both ideas and activist organizations. Even the threat of unseating Republican lawmakers in next year’s midterm elections has that leverage potential.

But more importantly, the America Party frees Elon Musk from the baggage surrounding President Trump. And with Tesla’s prospects tied to Elon Musk’s image, there is greater leeway to improve branding loyalty. Yet, this only works if Tesla fundamentals are present.

Tesla’s Ace Up the Sleeve: Robotaxi

It is safe to say that the entire Tesla valuation rests on its full self-driving (FSD) rollout, first announced in 2016, but officially having launched the beta program in October 2020. Elon Musk propelled the luxury EV brand and popularized the very concept of EVs, but these were just precursors to autonomous driving.

After the needless and costly expenditure on the plagued Cybertruck, combined with the devastating market share shrinkage in the EU against Chinese EVs, Tesla’s future now relies on its FSD advantage. The real-world test case only started recently in Austin, Texas.

However, there are also videos of accidents prompting the U.S. National Highway Traffic Safety Administration (NHTSA) to gather more information. At this point, the limited robotaxi rollout in Austin is a mixed bag. Of course, with the existing influence nodes mobilized against Musk, it is also expected that each error is amplified for ideological reasons similar to the Trump Derangement Syndrome (TSD) phenomenon.

Only long-term statistics will determine the robotaxi’s error rate. More importantly, if there is a trend of lowering the error rate, owing to FSD’s reliance on machine learning for self-improvement. If such a trend shows up, this will build public trust regardless of recorded accidents.

Ultimately, if FSD is proven robust enough, it will be a massive boon for Tesla. The social status alone, of having an essentially robotic chauffeur, will likely drive Tesla sales. Likewise, the disruptive nature of robotaxis, eliminating the need for sketchy drivers and tipping, could finally justify Cathie Wood’s exposure to TSLA stock, as the largest stake across ARK ETFs.

Should Tesla Board Curtail Musk’s Public Outputs?

On Tuesday, Wedbush Securities analyst Dan Ives warned that the formation of the America Party represents a “tipping point in the Tesla story and ultimately the Tesla Board needs to act now and set the ground rules for Musk going forward around his political ambitions and actions.”

This would be a wise move, even if the America Party acts as a leverage mechanism. At the bare minimum, one would expect Musk to have professional consultants to properly anticipate the public’s reactions to his moves in the political arena.

Over the week, TSLA stock is down 3%, currently priced at $294 per share, with a negative performance of 22% year-to-date. This price level is still below the average TSLA price target of $313.50 according to WSJ’s forecasting data. Most of the analysts are divided between holding and buying, at 20 vs 20, while 11 analysts think this is a selling price point.

As always, this makes TSLA exposure highly speculative, driven both by Elon Musk’s persona and the uncertainty around FSD’s robustness.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

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