ETFs to Ride on Tesla's Renewed Growth Story

Despite weak quarterly earnings, Tesla TSLA has been riding higher on optimism over the launch of robotaxis and Musk’s promise to refocus on his business (read: Should You Buy Tesla ETFs Post Q1 Earnings Miss?). 

Investors can capitalize on the potential growth with 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.

Robotaxi Launch

According to a Bloomberg report, Tesla plans to launch its long-awaited robotaxi service in Austin, TX, on June 12. The news marks a key milestone in CEO Elon Musk’s strategy to transition Tesla toward autonomous driving and artificial intelligence. The launch date is still tentative and subject to internal review but it aligns with Musk’s earlier statements that the service would debut by the end of June.

Tesla has successfully completed a driverless test drive of a Model Y SUV on public roads in Austin, marking a significant milestone as the company prepares to launch its robotaxi service.

Elon Musk's Exit from Government Role

Elon Musk announced his departure from his advisory role in the Trump administration's Department of Government Efficiency (DOGE). This move signals Musk's renewed focus on Tesla amid recent challenges. Investors are optimistic that his full attention will drive innovation and address the company's recent hurdles, including declining sales and production issues.

Humanoid Robots and AI Ambitions

Beyond electric vehicles, Tesla is investing heavily in AI and humanoid robotics—areas Elon Musk believes could redefine the company's future value. While these initiatives are promising, they remain highly speculative, and many investors are holding out for more concrete progress before fully committing.

Big Q1 Earnings Miss

Tesla reported dismal first-quarter 2025 results, missing estimates for earnings and revenues. 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.

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 $31.9 million. TESL trades in volume of 34,000 shares per day on average (read: Best-Performing ETFs of Last Week). 

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 22.2% 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 $25 million in its asset base.

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 18.7% of the assets. Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $21.7 billion and charges 8 bps in annual fees. It trades in an average daily volume of 3.5 million shares and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Consumer Confidence Surges in May: ETFs to Gain).

Vanguard Consumer Discretionary ETF (VCR)

Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 292 stocks in its basket. Of these, Tesla occupies the second position with a 14.3% allocation. Vanguard Consumer Discretionary ETF charges investors 9 bps in annual fees, whereas volume is good at nearly 60,000 shares a day. The product has managed about $6 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 14.7% share. Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.8 billion in its asset base while trading in a good volume of around 165,000 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

Tesla's robotaxi initiative is progressing more quickly than anticipated, with near-term testing and self-delivery milestones acting as catalysts. Combined with Musk’s re-dedicated leadership and a long-term vision rooted in autonomy and AI, Tesla appears poised to solidify its position at the forefront of the next automotive revolution.

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

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