Tesla Downgraded by William Blair; Musk Promises New Political Party

Tesla's stock price has dropped after William Blair downgraded the company. CEO Elon Musk has promised to establish a new political party. The Fly's YouTube channel provides real-time stock market reporting and analysis. TipRanks offers expert insights and investing tools, including a half-year sale on Premium subscriptions.

Tesla's stock price experienced a significant decline on Monday following a downgrade by William Blair. The analyst firm downgraded Tesla from "Outperform" to "Market Perform," citing concerns over the company's political entanglements and the loss of EV tax credits and regulatory credits stemming from President Trump's recent legislation.

CEO Elon Musk has been vocal in his criticism of Trump's bill, which he believes will do little to benefit the American people. Musk recently polled his followers on X, asking if they wanted an independent political party, and a majority voted in favor. On Saturday, Musk announced the formation of the "America Party," aiming to target select seats in Congress to prevent either major party from reaching a majority.

The bill, signed into law by President Trump, eliminates the $7,500 tax credit for electric vehicles, which expires on September 30. This loss is expected to impact demand for EVs, including Tesla's models. Additionally, the bill reduces fines for automakers not meeting Corporate Average Fuel Economy (CAFE) standards, potentially eroding market demand for Tesla's regulatory credits. William Blair's Jed Dorsheimer estimates that 75% of Tesla's regulatory credit revenue is tied to the CAFE standards, which could result in a significant hit to the company's bottom line.

Dorsheimer expects the loss of the EV tax credit to lead to an increase in unit volumes in the third quarter but anticipates pressure on fourth-quarter sales and margins. He also notes that Musk's political efforts could further distract investors from the company's core business.

Tesla's stock slipped over 7% in Monday trading, reflecting investor concerns over these developments. The political battle between Musk and Trump has previously led to stock volatility, with the stock being pummelled a few weeks back before recovering. Analysts and investors are hoping that Musk's focus will shift back to the company's core business, particularly the robotaxi rollout.

References:
[1] https://finance.yahoo.com/news/tesla-stock-drops-on-musks-latest-battle-with-trump-loss-of-ev-and-regulatory-credits-140258240.html
[2] https://www.cnbc.com/2025/07/07/william-blair-downgrades-tesla.html
[3] https://www.yahoo.com/news/elon-musk-political-party-know-014455761.html