Tesla shares drop 7% in premarket trading after Elon Musk says he is launching a political party

Tesla shares fell in premarket trade on Monday after CEO Elon Musk announced plans to form a new political party.

The stock was down 7.13% by 4:27 a.m. E.T.

Musk said over the weekend that the party would be called the "America Party" and could focus "on just 2 or 3 Senate seats and 8 to 10 House districts." He suggested this would be "enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people."

The billionaire's involvement in politics has been a point of contention for investors. Musk earlier this year was part of the so-called Department of Government Efficiency and worked closely with President Donald Trump — a move seen as potentially hurting Tesla's brand.

Musk left DOGE in May, which helped Tesla's stock.

Now tech billionaire's reinvolvement in the political arena is making investors nervous.

"Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story," Dan Ives, global head of technology research at Wedbush Securities, said in a note on Sunday.

"While the core Musk supporters will back Musk at every turn no matter what, there is broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track."

This is a developing story. Please check back for more.