Tesla's stock plummeted by 7.6% in premarket trading after CEO Elon Musk announced a new American political party. This sparked a furious reaction from President Trump, who criticized Musk's actions as "ridiculous" and predicted chaos. Investors fear further friction between Musk and Trump could lead to reduced US government EV subsidies and that Musk is becoming distracted from Tesla's business. This drop follows Tesla's record fall in second-quarter sales and growing competition from rival EV makers, particularly BYD. The stock's decline marks a significant reversal from post-election gains fueled by hopes of a Trump-Musk alliance.

Prepared by Christopher Adams and reviewed by editorial team.