Investors Pour Big Money Into Tesla ETFs as Stock Craters

Investors have piled into Tesla Inc. (TSLA) ETFs as shares of the electric-vehicle maker have collapsed in recent weeks, but key data on the company’s sales loom, potentially exacerbating the situation.

The decline is staggering. On Monday, Tesla stock plunged 15%, marking its largest single-session drop in five years. Since the start of the year, the stock has tumbled 45%, and from its December peak, it’s down a jaw-dropping 54%.

The reasons for Tesla’s slump are two-fold. First, the broader stock market has pulled back as President Trump’s trade war stokes concerns about the economy and corporate earnings. 

But Tesla’s troubles are also company-specific. CEO Elon Musk’s close association with the Trump administration has alienated many consumers, leading to a drop in demand for its vehicles.

Sagging Sales

Recent data paint an ugly picture. Sales of Tesla cars in Germany and Australia plunged 76% and 66%, respectively, in February. Large sales declines have also been reported across Europe and even China, where competition with local automakers is fierce.

Musk’s role in the Trump administration, including his involvement in the Department of Government Efficiency and his perceived sympathy toward Russia in its conflict with Ukraine, has led to intense consumer backlash.

In 2024, Tesla’s sales declined by 1.1%, the first annual drop in the company’s history. As recently as October, Musk had predicted Tesla sales would rebound in 2025 by as much as 30%. However, analysts are now warning that growth could be much lower—or that sales could even decline further.

Investors will get a clearer picture when Tesla reports its Q1 delivery figures in April. Analysts at UBS forecast that Tesla may deliver only 367,000 units in the first quarter, which would be the lowest quarterly level since 2022.

Buying the Dip with Tesla ETFs

Despite the turmoil, some investors are betting that Tesla’s decline is overdone. The Direxion Daily TSLA Bull 2X Shares ETF (TSLL) has seen massive inflows—$585 million over the past week and $1.6 billion over the past month. 

But most investors in the fund are deeply underwater, with TSLL having plunged more than 80% from its December highs and by a third in just the past week, underscoring the risks of leveraged ETFs.

Conversely, investors have been cashing out of the bearish Tesla ETF, the Tradr 2X Short TSLA Daily ETF (TSLQ), withdrawing $40 million over the past week and $86 million over the past month, even as the price of the ETF has tripled since late January.

TSLQ remains much smaller than its bullish counterpart, holding $261 million in assets compared to TSLL’s $2.4 billion.

Reversal of Fortune

The sharp downturn in Tesla and TSLL is a reversal of the post-election euphoria, when Tesla shares doubled and TSLL soared fourfold on hopes that Musk’s ties to Trump would bolster the company’s future.

At the time, investors were particularly bullish on Tesla’s robotaxi and humanoid robot businesses. However, those futuristic ventures have yet to generate revenue, leaving investors focused on the core EV business, which is showing notable signs of weakness.

Tesla has announced plans to launch its robotaxi business in Austin, Texas, in June. But, for now, investors are more concerned with flagging demand for its existing vehicle lineup. 

The situation has become so dire that Donald Trump himself has stepped in, urging his followers to buy Teslas. “I’m going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk, a truly great American,” he wrote on Truth Social.

While some investors are betting that the worst is behind Tesla, others warn that more downside could be ahead if the upcoming sales data confirm a deeper slump. The next few weeks could be critical for both Tesla’s stock and the ETFs that track it.