Should You Buy Tesla ETFs Post Q1 Earnings Miss?

Tesla TSLA reported dismal first-quarter 2025 results, missing estimates for earnings and revenues. However, shares of Tesla jumped more than 5% in after-market hours after CEO Elon Musk injected optimism by reaffirming the company’s goals for the launch of robotaxis and affordable vehicles. Musk’s promise to refocus on his business rekindled investor hopes.

Tesla is down 39% since the start of the year. The beaten-down prices offer solid entry points for investors. Given the promising plans, investors should consider ETFs having a substantial allocation to this luxury carmaker. These include Simplify Volt TSLA Revolution ETF TESL, The Nightview Fund NITE, Consumer Discretionary Select Sector SPDR Fund XLY, Vanguard Consumer Discretionary ETF VCR and Fidelity MSCI Consumer Discretionary Index ETF FDIS.

Big Q1 Earnings Miss

Adjusted earnings per share came in at 27 cents, missing the Zacks Consensus Estimate of 44 cents and deteriorating 71% from the year-ago earnings. This marked the sixth earnings miss in the last seven quarters. Revenues dropped 9% year over year to $19.3 billion and fell short of the Zacks Consensus Estimate of $20.98 billion.  

The big miss was attributable to the automaker’s brand crisis amid waves of protests, boycotts and criminal acts in response to CEO Elon Musk’s political antics and work in the Trump administration.

Tesla’s Dismal Q1 Delivery Numbers

Earlier this month, Tesla reported its worst quarter of sales in three years. It delivered 336,681 (323,800 Model 3/Y and 12,881 other models) cars worldwide in the first quarter, down 13% year over year and marked the worst quarter since 2022. With this, Tesla also lost its crown as the world’s largest EV maker to Chinese EV maker BYD, which has sold 416,388 EVs in the same period (read: Tesla Sees Worst Vehicle Sales in 3 Years: ETFs in Focus).

Tesla produced 362,615 (345,454 Model 3/Y and 17,161 other models) vehicles during the quarter. 

New Model Launch Plans

Tesla announced its plans for new vehicles, including more affordable models. Production of these vehicles is likely to start in the first half of 2025. Musk said, “These vehicles will utilize aspects of the next-generation platform as well as aspects of the current platforms and will be produced on the same manufacturing lines as the current vehicle lineup.”

Robotaxi Launch on Track as Planned

Tesla reaffirmed plans to launch a robotaxi service in Austin, TX, by June and start volume production next year. 

Electric Semi Truck on Track

Musk stated that the full production of its all-electric Class 8 Semi truck would begin in 2026 at its Gigafactory Nevada. The first builds of the high-volume Semi design will come late this year and begin ramping early in 2026.

Tariff Impact

Musk said that Tesla was the least impacted car company by Trump’s tariffs, which currently impose a 25% duty on all imported automobiles (read: Here's Where Tesla Stands Amid Auto Tariffs: ETFs in Focus).

Elon Musk's Renewed Focus on Tesla

Admitting the negative impact of his political involvement on Tesla's brand, Musk announced his time allocation to the Department of Government Efficiency (DOGE) would "drop significantly" starting next month. He would spend only one to two days per week on government matters, "as long as the president would like him to do so and as long as it's useful." This will be a positive step toward stabilizing the company's direction and addressing brand challenges.

ETFs to Tap

Simplify Volt TSLA Revolution ETF (TESL) 

Simplify Volt TSLA Revolution ETF uses an active management strategy to capture the potential of Tesla’s stock price movements while implementing an advanced options overlay to manage downside risks. It has an expense ratio of 1.20% and AUM of $17 million. 

The Nightview Fund (NITE)

The Nightview Fund is an actively managed fund seeking long-term capital appreciation with the goal of outperforming the S&P 500 Total Return Index over a rolling 5-year period. It holds 19 stocks in its basket, with Tesla occupying the top position at 18.2% of its assets. The Nightview Fund charges 1.25% in annual fees and trades in an average daily volume of 2,000 shares. It has accumulated $20.4 million in its asset base since its launch last June.

Consumer Discretionary Select Sector SPDR Fund (XLY)

Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 51 securities in its basket, Tesla takes the second spot with 14.1% of the assets. Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $18 billion and charges 8 bps in annual fees. It trades in an average daily volume of 6.5 million shares and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

Vanguard Consumer Discretionary ETF (VCR)

Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 293 stocks in its basket. Of these, Tesla occupies the second position with a 13.3% allocation. Vanguard Consumer Discretionary ETF charges investors 9 bps in annual fees, whereas volume is good at nearly 157,000 shares a day. The product has managed about $5 billion in its asset base and carries a Zacks ETF Rank #3 with a Medium risk outlook.

Fidelity MSCI Consumer Discretionary Index ETF (FDIS)

Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 262 stocks in its basket. Of these, TSLA takes the second spot with a 13.4% share. Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.6 billion in its asset base while trading in a good volume of around 164,000 shares a day on average. Fidelity MSCI Consumer Discretionary Index ETF charges 8 bps in annual fees from investors and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.

Bottom Line

While Tesla faces ongoing challenges, including trade policy uncertainties and brand perception issues, the company's strategic pivot toward affordable EVs, Robotaxis, autonomous services, and AI advancements positions it for potential recovery and growth.

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This article originally published on Zacks Investment Research (zacks.com).

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