Musk has been able to play off Tesla's struggles for over a year now because the stock has been astonishingly resilient. Neither political gaffe nor falling deliveries has knocked Tesla off its upward trajectory, but Monday's selloff may be a sign of a changing sentiment.

Tesla shares sank Monday after CEO Elon Musk announced he would form a new political party in an escalation of his feud with President Donald Trump.

Mr. Musk’s involvement in politics and his financial support for the president’s campaign was once seen by investors as a benefit to Tesla, fueling a steep rise in company shares after the election last year. That association has now turned into a liability. Tesla shares are down 40 percent from their peak in December.