Last week, President Donald Trump signed his One Big Beautiful Bill Act into law. The legislation is unpopular with Americans across the political spectrum, primarily because it will cut critical social and health services for more than 10 million people while at the same time giving the country’s wealthier individuals billions in tax breaks.  However, the law’s critics are not just everyday Americans, but also include Elon Musk, CEO of Tesla and the world’s richest man. Musk’s public objection to the bill has more to do with the fact that it will raise the U.S. deficit by trillions, something he is fundamentally opposed to. And in response to the passage of the law—and his unhappiness with the Republicans who supported it—Musk announced he would form a new political party. What happened next is pretty predictable: The price of Tesla stock (Nasdaq: TSLA) declined in premarket trading on Monday, with markets set to open after the long July 4 weekend. Here’s why and what you need to know. Musk’s new ‘America Party’ Shortly after President Trump signed the One Big Beautiful Bill Act into law, Musk announced that he would form a new political party in America. It’s called the America Party—and that’s about as much as we know about it. Musk has so far not provided any information about the party’s main policy objectives, whether that includes supporting universal healthcare, tech entrepreneurship, or other priorities. However, given that the party is being formed in response to the One Big Beautiful Bill Act and the increased debt that it’s expected to cause, it’s a good bet that fiscal conservatism will be one of the primary tenets of the American Party. Announcing the new America Party, Musk said on X: “When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy. Today, the America Party is formed to give you back your freedom.” Tesla stock sinks after Musk’s return to politics Americans who agree with Musk that there is essentially little difference between Democrats and Republicans—and, therefore, a new third party is needed to challenge the status quo—may be cheering his decision to launch the America Party. Tesla investors, however, have a different take. As of the time of this writing, shares in TSLA are slumping in premarket trading on the first morning of trading after Musk made his announcement. Currently, TSLA shares are down around 6.5% to just under $295 per share. But why? Because whenever Musk gets involved in politics, Tesla seems to suffer. Earlier this year, Tesla stock sank for months on end after Musk led the Department of Government Efficiency (DOGE). The department’s ruthless cutting of supposedly wasteful spending divided the nation. It also made Tesla a target for those who disagreed with Musk’s involvement in politics. Tesla’s sales and its share price both sank once Musk’s DOGE activities began.  Tesla shares recovered in June when Musk announced that he was stepping away from politics and would again focus on his businesses, including Tesla. But now that Musk has announced the formation of a new political party, Tesla investors seem worried that, at best, it will take Musk’s attention away from running the company and, at worst, it will serve to further alienate consumers who disagree with his politics. Year to date, Tesla’s stock price has already cratered 21% as of market close on July 3.