TLDR
- Tesla stock fell 0.2-0.4% in premarket trading as reports emerged that Elon Musk may abandon plans to form the “America Party” political movement
- Tesla insiders excluding Musk have sold over 50% of their holdings in the past year, totaling approximately $2 billion in stock sales
- Tom Zhu, Tesla’s manufacturing chief, reduced his stake by 82% despite Musk’s public optimism about the company’s future
- Tesla launched the Model Y “L” variant in China with six seats but Musk suggests it may not come to the US due to self-driving focus
- Tesla shares are down 18% year-to-date but up 49% over the past 12 months
Tesla shares opened lower Wednesday morning following reports that CEO Elon Musk may be backing away from his plans to create a third political party. The stock dropped 0.2% to $328.66 in premarket trading.
The Wall Street Journal reported Tuesday evening that Musk was “quietly pumping the brakes” on forming the America Party. Sources familiar with his plans indicated the billionaire was stepping back from the political venture announced in July.
Tesla declined to comment on the reports. The company has not issued any official statement regarding Musk’s political activities.
Musk’s political involvement has created headaches for Tesla throughout 2025. His role in the Trump administration initially alienated core Tesla buyers who lean politically left.
Global vehicle sales dropped 13% year-over-year in the first half of 2025. Management cited brand image challenges as a contributing factor to the sales decline.
The CEO’s departure from the Trump administration led to public feuding with President Trump. This conflict added volatility to Tesla’s stock price for several months.
In July, Musk promised to form the America Party during the height of his disputes with the administration. The announcement positioned the new party as an alternative to traditional Democrats and Republicans.
Executive Exodus Behind the Scenes
While political drama may be cooling, Tesla insiders have been quietly reducing their stakes. Excluding Musk himself, executives and board members have sold more than 50% of their holdings over the past year.
This selling spree represents approximately $2 billion worth of stock at current prices. The pattern includes key executives across multiple departments.
Tom Zhu, who oversees Tesla’s manufacturing operations, reduced his stake by 82% in a single year. This massive reduction comes despite Musk’s repeated public claims about Tesla’s bright future prospects.
Tesla’s executive team has shrunk considerably in recent months. The company now lists only three key executives: Musk, Zhu, and CFO Vaibhav Taneja.
Several high-profile departures occurred throughout the year. Drew Baglino, the former head of engineering, left the company along with other senior staff members.
Board members also participated in the share reduction trend. Some changes resulted from stock option cancellations related to ongoing shareholder litigation over executive compensation packages.
Product Strategy Shifts Focus
Tesla made product news this week with the launch of the Model Y “L” variant in China. The new configuration features six seats with a third row and captain’s chairs in the middle section.
Musk indicated this variant might not reach the US market. He suggested that self-driving technology could eliminate the need for additional seating configurations in America.
“This variant of the Model Y doesn’t start production in the US until the end of next year,” Musk posted on social media. “Might not ever, given the advent of self-driving in America.”
The CEO continues to emphasize autonomous driving as Tesla’s primary value proposition. He frequently positions AI-trained self-driving cars as the company’s most important growth driver.
Analyst Jed Dorsheimer from William Blair recently valued Tesla’s self-driving technology at nearly $1 trillion. This valuation reflects Wall Street’s continued optimism about the autonomous driving opportunity.
Tesla’s current vehicle lineup faces pressure from declining sales performance. More model variations could help address this challenge across different market segments.
However, Musk appears reluctant to expand traditional vehicle offerings. His focus remains firmly on artificial intelligence applications and autonomous driving capabilities.
The Model Y “L” variant launch in China demonstrates Tesla’s willingness to customize products for specific regional markets.
Tesla shares reflect mixed investor sentiment about the company’s direction. The stock has declined 18% year-to-date while gaining 49% over the past 12 months.
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