(Reuters) -Traders are set to make about $1.4 billion in paper profits from their short positions in Tesla shares on Monday after CEO Elon Musk's plans to launch a new U.S. political party heightened concerns about his commitment to the company's future.

The company's shares slumped 7.5% in early trading after Musk's political move, which followed an open feud with Donald Trump over the U.S. president's tax-cut and spending bill.

At a price of $296, investors betting against the EV-maker are on tack to make about $1.4 billion in profits, according to data analytics firm Ortex.

Short sellers had clocked more than $4 billion in profits on June 5, a day when Tesla saw its biggest single-day drop in market value after Trump and Musk's discord erupted into an all-out social media brawl.

Tesla's shares fell 7.5% at $291.50, having lost more than 21% so far this year.

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Saumyadeb Chakrabarty)