Elon Musk could face boardroom revolt if the Tesla (TSLA:NASDAQ) chief executive presses ahead with plans to launch a new political party, and analysts are worried.

Shares in the embattled electric vehicle maker fell sharply as investors fear that the move will likely further divert his attention away from the company. The stock plunged nearly 7% on 7 July, wiping out a large chunk of the recovery gains made since April.

It leaves the share price down 22.5% year to date and the best part of 40% off $480 all-time highs (adjusted for share splits) as the company continues to grapple with enormous challenges. It also puts hard decisions in front of the Tesla board, led by chair Robyn Denholm.

Intense competition from China and pressure on margins has been well documented. It has seen Tesla results miss growth expectations time and again, yet it is Musk’s activities away from Tesla that is cranking up the pressure.

Tesla sales have taken a hefty hit from a brand crisis that can be traced back to Musk’s position with the Department of Government Efficiency, or DOGE, an alleged effort to cut waste and fraud in the US government that split opinions among potential Tesla buyers.

Musk’s political aims are now igniting another face-off with president Trump that could have severe ramifications for Tesla shareholders. William Baird analyst Jed Dorsheimer has warned that the Republican tax and spending bill has eliminated the $7,500 tax credit for new electric vehicle purchases or leases, posing a significant challenge for Tesla.

The analyst pointed out that while the removal of the tax credit may affect demand, the dual pressures of diminished demand and more than $2 billion in regulatory credit revenue at risk may become unbearable for investors.

Dan Ives, tech analyst at Wedbush, is worried that Musk’s launch of his ‘America Party’ could exert pressure on both the Republicans and Democrats by influencing the outcome in a dozen hotly contested races. ‘There is a broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track,’ Ives told clients.

It marks the return to political activism that many Tesla investors had hoped was firmly behind them. ‘Very simply Musk diving deeper into politics is exactly the opposite direction that Tesla investors want him to take during this crucial period for the Tesla story,’ warned Ives.

There is a growing sense that investors are growing weary of Musk’s political activities, and it could force the board to face the prospect of demanding he stand down from day-to-day operations, a prospect that would previously have been unthinkable. 

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