10:41 AM EDT, 07/08/2025 (MT Newswires) -- Tesla's (TSLA) board must set parameters to rein in Chief Executive Elon Musk's political ambitions after the tech billionaire disclosed plans to form a new political party, Wedbush Securities said in a Tuesday note.

Musk announced over the weekend that he is launching the "America Party," following his public spat with President Donald Trump over the US leader's tax and spending bill. The electric vehicle maker's shares declined nearly 7% on Monday.

The stock was up 1.5% in Tuesday's session, but has lost about 26% of its value since the start of the year.

The brokerage recommended the Tesla board to take certain steps, including designing a new pay package for Musk that specifies the amount of time he needs to spend on Tesla operations, Wedbush analyst Daniel Ives said.

The new pay package should dictate Musk to increase its ownership of Tesla to control up to 25% of voting power, Ives said.

In addition, the board should create a special oversight committee that would set ground rules around Musk's actions in the political arena, the analyst said.

"The board cannot control Musk's (political) donations...but they can have oversight if his political ambitions/endeavors interfere with his role as CEO of Tesla," Ives said.

Wedbush is sticking with its outperform call on Tesla's stock and a $500 price target.

"Tesla is heading into one of the most important stages of its growth cycle with the autonomous and robotics future now on the doorstep and cannot have Musk spending more and more time creating a political party which will require countless time, energy, and political capital," Ives wrote.

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