Tesla ETFs: What's Next After Worst Q2 in a Decade?
The dismal result has put ETFs with a substantial allocation to this luxury carmaker in focus. These include Simplify Volt TSLA Revolution ETF TESL, Consumer Discretionary Select Sector SPDR Fund XLY, The Nightview Fund NITE, Fidelity MSCI Consumer Discretionary Index ETF FDIS and Vanguard Consumer Discretionary ETF VCR.
Q2 Earnings in Focus
Adjusted earnings per share came in at 33 cents, missing the Zacks Consensus Estimate of 39 cents and below the year-ago earnings of 30 cents. Revenues dropped 12% year over year to $22.5 billion and fell short of the Zacks Consensus Estimate of $22.43 billion. The weak results were largely due to lower automotive revenues, which fell 16% year over year as a result of a slump in vehicle sales.
Earlier this month, Tesla reported a decline in global deliveries for the second quarter of 2025, marking its second consecutive quarterly drop. This leading electric carmaker delivered 384,122 (373,728 Model 3/Y and 10,394 other models) cars worldwide in the second quarter. The figure declined 13.5% from the year-ago quarter, marking the worst year-over-year decline in deliveries in the company's history. Tesla produced 410,244 (396,835 Model 3/Y and 13,409 other models) vehicles during the quarter (read: Will Tesla's Worst-Ever Q2 Vehicle Sales Drop Shake its ETFs?).
Musk warned of potentially 'rough quarters' ahead, as the company continues to grapple with slowing sales.
Robotaxi Launch Promises Growth
Tesla has officially begun the rollout of its paid robotaxi service in Austin, TX, marking a significant step forward in its autonomous vehicle ambitions. The company plans to expand the driverless cab service to several other cities soon.
On the post-earnings call, CEO Elon Musk said Tesla aims to make the robotaxi service available to 'probably half of the population of the U.S. by the end of the year,' subject to regulatory approvals. He also reiterated his expectation of having hundreds of thousands of robotaxis on U.S. roads by the end of next year, signaling an aggressive expansion timeline (read: Capitalize on Tesla's Robotaxi Momentum With These ETFs).
Other Growth Drivers
One way Tesla plans to boost sales is by launching a more affordable vehicle. The company now aims to bring this lower-cost model to market in the final quarter of the year, delayed from its earlier target of June.
CEO Elon Musk also said he expects Tesla's so-called Full Self-Driving (FSD) software to receive regulatory approval in parts of Europe by year-end. This timeline is a shift from his earlier projection of March. Despite its name, the FSD system is not fully autonomous.
It remains a driver-assistance feature and requires active human supervision.
In the robotics space, Musk projected massive growth for Tesla's humanoid robot, Optimus. He said the company plans to scale production to 100,000 units per month within five years.
Musk's Political Engagements Painful for Tesla
Investor anxiety has intensified in recent weeks over CEO Elon Musk's ability to steer Tesla effectively as he deepens his involvement in politics. In July, Musk announced the formation of a new political party, putting him at odds with U.S. President Donald Trump. Just weeks earlier, he had pledged to reduce his engagement in public sector roles and refocus on his businesses.
Musk's political entanglements have also sparked international backlash. His vocal support for Germany's far-right AfD party has dented Tesla's reputation in Europe, while his prior role leading the short-lived U.S. Department of Government Efficiency and the associated federal layoffs has drawn criticism at home.
The combination of falling sales, leadership churn and Musk's political pivot has cast a shadow over Tesla's near-term outlook, with investors questioning whether the company's visionary CEO can remain focused on the road ahead.
ETFs in Focus
Simplify Volt TSLA Revolution ETF (TESL): It 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.
Consumer Discretionary Select Sector SPDR Fund (XLY): Tesla makes up for 16.5% of the portfolio.
The Nightview Fund (NITE): Tesla accounts for 14.9% of the portfolio.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS): Tesla accounts for 14.7% of the portfolio.
Vanguard Consumer Discretionary ETF (VCR): Tesla accounts for 14.5% of the assets.
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