Tesla ETFs Spike as Musk Announces Robotaxi Release

Tesla shares jumped as much as 5% early Monday after founder and CEO Elon Musk announced that the company would unveil its robotaxi on Aug. 8. 

“Tesla Robotaxi unveil on 8/8,” Musk wrote on X, hours after Reuters reported that Tesla was scrapping its plans to build a cheap, mass market vehicle for consumers. 

The car, which has been speculated to cost $25,000, was instrumental to Elon Musk’s plans to boost his company’s vehicle production from around two million per year currently to as much as 20 million per year by the end of the decade. 

Any indication that Tesla was abandoning the car, dubbed the “Model 2,” would likely have been received negatively by investors.  

On Friday, after Reuters released its report, which cited “three sources familiar with the matter and company messages seen by Reuters,” Tesla shares dropped 3.6%. 

Today’s move higher erased those losses.  

Battleground Stock 

Tesla remains a battleground stock where competing narratives are leading to enormous volatility.  

Those who see the company as a car company believe its $500 billion market cap is unjustified, particularly because the electric vehicle market has been slumping as the supply of EVs outstripped demand from early adopters and manufacturers failed to cultivate new buyers. The world’s largest EV company has also battled other challenges, including supply chain issues stemming from the wars in Ukraine and Gaza and increasing competition from other manufacturers.  

Last week, Tesla reported that its vehicle deliveries in the first quarter totaled 386,810, down 8.5% from a year ago. 

Reuters report last week added fuel to the idea that Tesla’s best days are behind it. Tesla is far and away the worst performing Magnificent 7 stock this year, with a loss of 31%. 

Musk responded to Reuters’ story by accusing the news outlet of lying about his company’s Model 2 plans. 

On the other hand, Musk’s robotaxi announcement has reignited optimism in one of the key pillars of the Tesla bull case; namely, that the company is an A.I. company as well as a car producer.  

ETF Holdings  

For investors in most of the 353 U.S.-listed ETFs that hold Tesla, the headlines and gyrations in the stock are an amusing sideshow.  

But there are several funds where the stock’s movements are a massive driver of returns. 

Single stock ETFs like the Direxion Daily TSLA Bull 2X Shares (TSLL) depend entirely on Tesla. Shares of the ETF were up 10% on Monday.  

But even sector ETFs, like the Vanguard Consumer Discretionary ETF (VCR) and the Consumer Discretionary Select Sector SPDR Fund (XLY), which hold nearly 14% of their portfolio in the stock, are strongly influenced by it. 

XLY was up 1% in Monday morning trading, four times the gain for the S&P 500. But that heavy weighting in Tesla cuts both ways. 

The ETF is up a mere 1% year-to-date, a sharp underperformance versus the broader index. 

For a full list of the ETFs which hold Tesla, check out this page.