Tesla shares tumbled nearly 7% in pre-market trading after CEO Elon Musk announced the formation of a new political party over the weekend, aiming to challenge the Republican-led Congress. President Trump quickly dismissed the move as "ridiculous."

Musk announced Saturday that he had formed the "America Party," which he claims will give Americans "back your freedom."

"By a factor of 2 to 1, you want a new political party and you shall have it," and said the party would focus on "just 2 or 3 Senate seats and 8 to 10 House districts."He posted on X.

"Given the razor-thin legislative margins, that would be enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people," Musk said. He also stated that the party would caucus independently and that "legislative discussions would be had with both parties," in response to a user on X.

Musk’s deeper dive into politics has sparked fresh backlash. Though he was once a prominent supporter of Trump and backed efforts to cut government spending, the two later fell out after Musk criticized Trump’s massive tax-and-spending bill. While they eventually exchanged polite words and Musk returned to a business-focused role, he is now back in the political arena.

Commenting on the bill, Musk wrote, "The insane spending of this bill, which increases the debt ceiling by a record FIVE TRILLION DOLLARS, shows we live in a one-party country – the PORKY PIG PARTY!"

Trump responded bluntly over the weekend. "I think it’s ridiculous to start a third party," he said. "We have had tremendous success with the Republican Party. The Democrats have lost their way, but it’s always been a two-party system, and starting a third party just adds to the confusion."

Posting on Truth Social, Trump added, "I am saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks. He even wants to start a third political party, despite the fact that they have never succeeded in the United States. The system seems not designed for them. The one thing third parties are good for is the creation of complete and total disruption and chaos, and we have enough of that with the radical left Democrats, who have lost their confidence and their minds."

Trump also defended the bill that Musk had criticized, saying, "Republicans, on the other hand, are a smooth-running machine that just passed the biggest bill of its kind in the history of our country. It is a great bill but, unfortunately for Elon, it eliminates the ridiculous electric vehicle mandate, which would have forced everyone to buy an electric car in a short period of time."

Dan Ives, global head of technology research at Wedbush Securities and a longtime Tesla bull, also voiced concern. "Very simply, Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors and shareholders want him to take during this crucial period for the Tesla story," Ives wrote in a Sunday note.

"While core Musk supporters will back him at every turn, there is a broader sense of exhaustion among many Tesla investors that Musk keeps heading down the political track."