To The Moon

As Trump’s “One Big Beautiful Bill Act” was being pushed through Congress last week, Elon Musk made good on his earlier “threat” over the weekend by officially announcing the formation of The America Party on social media. The move quickly overshadowed the bill itself in media attention. On one hand, it signaled a complete rupture between Musk and Trump — once close political allies. On the other, it sparked broad debate on whether this new party might disrupt the long-standing duopoly of Democrats and Republicans in U.S. politics.

More immediately, Musk’s aggressive political intervention has unsettled Tesla $Tesla Motors(TSLA)$ investors. The company’s stock dropped over 5% in after-hours trading. Why would Musk risk a market selloff to charge into politics? Is this merely another attention-grabbing stunt, or could it have lasting implications for Tesla — and the American political landscape?

What Led to the Founding of The America Party?

Friday, July 4 — U.S. Independence Day — was the final deadline Trump had set for the passage of his massive budget bill. Ahead of the Senate vote, Musk once again warned via social media that the bill would “destroy millions of American jobs and inflict massive strategic harm.” He added that if the bill passed, he would launch The America Party the very next day. “Our country needs an alternative to the uni-party of Democrats and Republicans so the people can truly have a voice,” he declared.

Trump quickly fired back, threatening to revoke federal subsidies for Tesla $Tesla Motors(TSLA)$ and SpaceX. He also called on the Department of Government Efficiency to investigate Musk’s companies and even hinted that the administration might consider deporting him.

Despite the high drama, the bill narrowly passed in both the Senate and House after last-minute adjustments. True to his word, Musk launched a poll on July 5 asking his X followers whether they wanted to “break free from the two-party system.” With over 1.25 million participants, more than 65% voted yes. Musk then formally announced the creation of The America Party, stating its strategy would be to focus on just “2–3 Senate seats and 8–10 House seats” — enough to hold the balance of power on divisive votes. When asked online whether he was aiming for the 2024 midterms or 2028, Musk replied simply: “Next year” — a message interpreted by many as a hint at a run in 2026.

Source: X

Why Is Musk So Strongly Opposed to the “Big and Beautiful” Bill?

On the surface, Musk has framed his opposition to the bill around concerns about soaring deficits and the growing national debt — a blow, he argues, to his efforts to cut government waste during his time with the Department of Government Efficiency.

But Trump contends that Musk’s true motive is self-interest — that certain provisions in the bill threaten Tesla’s financial position.

One key provision is the elimination of penalties under the Corporate Average Fuel Economy (CAFE) standards. This mechanism previously penalized automakers for exceeding carbon emission thresholds while allowing EV makers like Tesla to earn and sell “carbon credits” to traditional automakers. With penalties now removed, there’s no longer a need for traditional carmakers to buy these credits — a major blow to Tesla $Tesla Motors(TSLA)$ , which derived 39% of its 2024 net profit from carbon credit sales.

Additionally, the bill rolls back significant green energy subsidies — including the $7,500 EV tax credit, set to expire in September — and eliminates tax breaks for batteries, charging infrastructure, and solar energy. These changes collectively pose a material threat to Tesla’s revenue streams.

That said, Tesla’s valuation has long since moved beyond carbon credits, with investor attention focused on its autonomous driving and robotics potential. Still, Musk’s public break with Trump directly undermines the rationale behind his initial support — namely, to win favorable policy treatment for his expanding business empire.

Now, he faces the risk of federal subsidies being slashed and key government contracts for Tesla and SpaceX being canceled. His political activism is also likely to alienate portions of the investor base.

So why is Musk pressing ahead anyway? One possibility is that he hopes to win favor among Trump’s critics and improve Tesla’s image abroad, where the brand has faced increasing political resistance. But more likely, it’s a bid to expand his own influence — part political ideology, part personal crusade.

What’s Next for “The America Party”?

Despite the buzz, The America Party may ultimately go nowhere. The U.S. political system has historically been hostile to third-party movements. It’s quite possible that Musk’s initiative is more about making a statement than building a functioning party.

Still, given his global fame and deep pockets, Musk could attract “independent” candidates and make inroads into key Congressional races. If he manages to secure a handful of seats, he could hold the balance of power in tightly contested legislative battles — giving him a platform to advocate for policies that benefit his companies.

But such a position would also make him a target — courted by both parties at times, and attacked by both when the stakes are high.

From an investor’s perspective, The America Party introduces a new and unpredictable variable into Tesla’s valuation. Going forward, the stock may be less reflective of the company’s technological progress and more of a barometer for its founder’s political entanglements.

Some investors may decide to exit due to disagreement with Musk’s activism, while others — aligned with his vision — may buy in. Tesla $Tesla Motors(TSLA)$ could become a symbolic political asset, dividing shareholders along ideological lines. In the short term, the stock may behave increasingly detached from its fundamental business performance.

Invesight Viewpoint

Right now, The America Party feels like Musk’s response to a dual frustration — political betrayal and economic threat. It may turn out to be a passing tantrum, or the start of a movement that shakes the foundations of U.S. politics.

At the very least, it complicates Tesla’s market narrative. The company is no longer just an EV and AI innovator — it’s becoming a reflection of one man’s political ambitions.

For Musk, business is no longer the goal — influence is. And for Tesla $Tesla Motors(TSLA)$ shareholders, evaluating the company’s fundamentals now means factoring in one more variable: the political convictions of its most powerful figure.

Company Profile

Invesight Capital is a professional asset management firm focused on modern value investing. We are committed to delivering long-term, sustainable capital appreciation for our clients through in-depth research and rational decision-making.

The name "Invesight" is a fusion of "Investing" and "Insight", symbolizing our core philosophy: insight is essential to investing. We firmly believe that only by understanding market cycles and gaining deep insight into a company's intrinsic value can we truly identify opportunities, manage risks, and achieve superior returns across market cycles.