CNBC’s Phil LeBeau joins ‘Squawk on the Street’ to discuss the market reaction to an X post from Elon Musk announcing potential new political ambitions.

Tesla shares experienced a decline following Elon Musk's announcement on X about plans to establish a new political party, the American Party. Investors and analysts expressed concerns that Musk's political ambitions could distract from his leadership at Tesla, which they see as crucial to the company's performance.

Despite some positive news, including a 14 percent increase in UK sales and a slight rise in China sales, the market response remained negative. Analysts highlighted that investors prefer Musk to focus on Tesla's core business, especially as the company recently reported quarterly deliveries just below estimates and faces uncertainties regarding regulatory credits.

Tesla shares under pressure after Musk announces new political party

Let's bring in Phil LeBow now with more on Tesla's pullback this morning. Phil, the market doesn't love Elon Musk being distracted. No, they don't. The market, and by that we mean investors, they want Elon Musk to focus on Tesla. I think that's pretty clear as we've seen things play out over the last month, going back to his initial sparring with the president and then saying, OK, let's get past this. Tesla shares went back up. Now they're under pressure again. That's because he posted on X that he would like to start or plans to start what's known as the American Party. It would be a third party. In one of several posts that were on X over the weekend, he wrote by a factor of two to one, you want a new political party and you shall have it. Well, investors would rather have him focus more exclusively on Tesla, especially after reports that he was going to be taking over, overseeing day to day operations more closely in Europe and in North America. And the shares had been rallying. But that is not the case this morning. There is one bit of good news. If you're a Tesla investor, UK sales in June up 14 percent. You combine this with China sales being up 1 percent, that report coming out last week. Perhaps we're seeing a bottoming in terms of the fall off in sales internationally. Nonetheless, last week the company reported Q2 deliveries of 384,000 vehicles, 122, 384,122. Just a shy below the estimate, but I wouldn't really call it a miss. The estimate was for 387. But this is the focus that most believe Elon Musk should have when it comes to Tesla. Restoring deliveries, focusing on the RoboTaxi, Optimus. That's where the investors wanted to go. In fact, Dan Ives out with a note today. Now, Dan Ives is perhaps the most bullish analyst on Wall Street when it comes to Tesla. He will tell you that things are going to get better, that Elon is the man when he's focused on Tesla. But he put out a note essentially saying this is not what investors want. They don't want Elon Musk focusing on political activities or spending most of his time talking about politics and fighting with the president. He wrote Tesla needs Musk as CEO and its biggest asset and not heading down the political route yet again while at the same time getting on Trump's bad side. No indication that this is, guys, this is getting on the president's bad side. The president responded by calling Elon's suggestion of a third party ridiculous. He says Elon is off the rails. But there was nothing by the president so far that is, hey, you keep coming at me. We're really going to take some action against Tesla. And that is the concern for investors. Yeah, Phil, the certainly the one downgrade we got today doesn't talk so much about relationship with the president, doesn't talk so much about auto deliveries. It's more about coming out on the losing end of this giant legislation that we got now. Right. And regulatory credits. And to what extent the zero emission vehicle credits, which have been very lucrative for Tesla, I think brought in two point five billion dollars last year. To the extent that those might be in danger. Remember, those are not tied into cafe standards. They are tied into greenhouse gas emissions. And yes, the president has said, hey, nobody has to listen to the carb standards anymore. That's going to be fought out in court. So it's little it truly is unclear how much of that ZEV credit revenue could be at risk for Tesla. That's the note that's out today. But there's no doubt, Carl, when you look at the stock down seven percent today, I think investors are saying, what are we focused on here? What is Elon focused on here? And if it's Tesla, I think that's what they want. If it's politics, then there's probably more than a few who are saying, OK, this is not getting us going in the direction we need when it comes to Tesla. Yeah, for sure. Phil, a lot of that nine hundred and forty billion dollars in market cap is based on Elon keeping the story story going in the way that investors like. Thanks very much, Phil.

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