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Tesla ETFs to Tap Robust Q1 Deliveries, Biden EV's Plan
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Tesla Motors (TSLA - Free Report) reported robust deliveries for first-quarter 2021. The company produced 180,338 (Model 3 and Y) vehicles and delivered a record 184,800 (182,780 Model 3 and Y, and 2,020 Model S and X) vehicles. Deliveries were up 109% from the year-ago quarter and 2.3% from Q4.
The Model Y was the primary catalyst for Tesla's vehicle sales growth during the quarter. The company stated that it was encouraged by strong reception of the Model Y in China and noted that it was quickly progressing to full production capacity (read: Best ETF Investment Strategies for Q2 2021).
Tesla halted Model S and Model X deliveries, as it has been redesigning the new versions of these vehicles and are in the early stages of ramping them. The company added new powertrains, higher range options, and the landscape in-car display from the more popular Model 3 to Model S and Model X. Tesla said that the redesigns were “exceptionally well-received” and that it is in the early stage of ramping up production on both new models.
On it Q4 earnings call, the electric carmaker projected another year of strong growth in vehicle deliveries for 2021 as it has been aggressively expanding its vehicle production capacity. It expects to achieve 50% average annual growth in vehicle deliveries in the coming years. Volumes may even grow at a faster rate in some of the years and 2021 could be one of them, the company projected. The addition of Model Y production at its factory in Shanghai and the expected contribution from new production lines in Germany and Texas later in 2021 should provide more-than-enough production capacity for Tesla to surpass its guidance.
Further, Tesla is expected to benefit from Biden’s proposed $174 billion infrastructure spending plan to encourage Americans to switch to cars and trucks that run on electricity, not gasoline or diesel. The move came in an effort to boost the development and adoption of electric vehicles, which include money to retool factories and push up domestic supply of materials, tax incentives for electric vehicles buyers, and grant and incentive programs for charging infrastructure (read: Guide to Electric Vehicle ETFs).
The Tesla stock is currently in the bear market, trading about 26% below the all-time highs reached in January. Given the strong deliveries report and Biden’s EV plan, shares will likely get a huge boost, suggesting the beaten down price as a solid entry point. Tesla has a Zacks Rank #3 (Hold) and Growth Score of A.
ETFs in Focus
The solid deliveries data has put the spotlight on ETFs having substantial allocation to this luxury carmaker. We have highlighted seven of them below.
Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report)
This is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology and then enhances the concentrated exposures with options. It is heavily exposed to the Tesla stock and Tesla call options at 25% share. The fund seeks to boost performance during extreme moves up in Tesla, charging investors 1.09% in annual fees. It has accumulated $1.4 million in its asset base while trades in an average daily volume of 7,000 shares.
This ETF offers exposure to U.S. companies that produce a wide range of consumer goods, including food, automobiles, and household goods by tracking the Dow Jones U.S. Consumer Goods Index. It holds about 98 stocks in its basket with Tesla occupying the top position at 15.9% allocation. The fund has amassed $778.1 million in its asset base while trades in a volume of about 40,000 shares. It charges 43 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This product offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most-popular product in this space, with AUM of nearly $19.4 billion and an average daily volume of around 4.4 million shares. Holding 63 securities in its basket, Tesla takes the second spot with 13.6% of assets. The fund charges 12 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Why Fear Rising Rates? Play Cyclical ETFs).
This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket with Tesla accounting for 10% share. The product has accumulated $66.7 million in its asset base and charges 58 bps in annual fees. It trades in an average daily volume of 70,000 shares and has a Zacks ETF Rank #3.
This is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research. In total, the fund holds 55 securities in its basket with Tesla occupying the top position, accounting for 11% share. The product has gathered $23 billion in its asset base and charges 75 bps in fees per year from investors. It trades in volume of 13.4 million shares per day on average (read: Thematic Investing on the Rise: ARK ETFs Leading the Pack).
This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 53 stocks in its basket with Tesla occupying the top position at 11%. The ETF has amassed $6.9 billion in its asset base and charges 79 bps in annual fees. It trades in an average daily volume of 2.2 million shares.
This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 47 stocks, with TSLA occupying the top spot with 10.6% share. The product has accumulated $3.3 billion in its asset base and charges 75 bps in fees per year. It trades in volume of 1.7 million shares a day on average.
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Tesla ETFs to Tap Robust Q1 Deliveries, Biden EV's Plan
Tesla Motors (TSLA - Free Report) reported robust deliveries for first-quarter 2021. The company produced 180,338 (Model 3 and Y) vehicles and delivered a record 184,800 (182,780 Model 3 and Y, and 2,020 Model S and X) vehicles. Deliveries were up 109% from the year-ago quarter and 2.3% from Q4.
The Model Y was the primary catalyst for Tesla's vehicle sales growth during the quarter. The company stated that it was encouraged by strong reception of the Model Y in China and noted that it was quickly progressing to full production capacity (read: Best ETF Investment Strategies for Q2 2021).
Tesla halted Model S and Model X deliveries, as it has been redesigning the new versions of these vehicles and are in the early stages of ramping them. The company added new powertrains, higher range options, and the landscape in-car display from the more popular Model 3 to Model S and Model X. Tesla said that the redesigns were “exceptionally well-received” and that it is in the early stage of ramping up production on both new models.
On it Q4 earnings call, the electric carmaker projected another year of strong growth in vehicle deliveries for 2021 as it has been aggressively expanding its vehicle production capacity. It expects to achieve 50% average annual growth in vehicle deliveries in the coming years. Volumes may even grow at a faster rate in some of the years and 2021 could be one of them, the company projected. The addition of Model Y production at its factory in Shanghai and the expected contribution from new production lines in Germany and Texas later in 2021 should provide more-than-enough production capacity for Tesla to surpass its guidance.
Further, Tesla is expected to benefit from Biden’s proposed $174 billion infrastructure spending plan to encourage Americans to switch to cars and trucks that run on electricity, not gasoline or diesel. The move came in an effort to boost the development and adoption of electric vehicles, which include money to retool factories and push up domestic supply of materials, tax incentives for electric vehicles buyers, and grant and incentive programs for charging infrastructure (read: Guide to Electric Vehicle ETFs).
The Tesla stock is currently in the bear market, trading about 26% below the all-time highs reached in January. Given the strong deliveries report and Biden’s EV plan, shares will likely get a huge boost, suggesting the beaten down price as a solid entry point. Tesla has a Zacks Rank #3 (Hold) and Growth Score of A.
ETFs in Focus
The solid deliveries data has put the spotlight on ETFs having substantial allocation to this luxury carmaker. We have highlighted seven of them below.
Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report)
This is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology and then enhances the concentrated exposures with options. It is heavily exposed to the Tesla stock and Tesla call options at 25% share. The fund seeks to boost performance during extreme moves up in Tesla, charging investors 1.09% in annual fees. It has accumulated $1.4 million in its asset base while trades in an average daily volume of 7,000 shares.
iShares U.S. Consumer Goods ETF (IYK - Free Report)
This ETF offers exposure to U.S. companies that produce a wide range of consumer goods, including food, automobiles, and household goods by tracking the Dow Jones U.S. Consumer Goods Index. It holds about 98 stocks in its basket with Tesla occupying the top position at 15.9% allocation. The fund has amassed $778.1 million in its asset base while trades in a volume of about 40,000 shares. It charges 43 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This product offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most-popular product in this space, with AUM of nearly $19.4 billion and an average daily volume of around 4.4 million shares. Holding 63 securities in its basket, Tesla takes the second spot with 13.6% of assets. The fund charges 12 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Why Fear Rising Rates? Play Cyclical ETFs).
MicroSectors FANG+ ETN (FNGS - Free Report)
This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket with Tesla accounting for 10% share. The product has accumulated $66.7 million in its asset base and charges 58 bps in annual fees. It trades in an average daily volume of 70,000 shares and has a Zacks ETF Rank #3.
ARK Innovation ETF (ARKK - Free Report)
This is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research. In total, the fund holds 55 securities in its basket with Tesla occupying the top position, accounting for 11% share. The product has gathered $23 billion in its asset base and charges 75 bps in fees per year from investors. It trades in volume of 13.4 million shares per day on average (read: Thematic Investing on the Rise: ARK ETFs Leading the Pack).
ARK Next Generation Internet ETF (ARKW - Free Report)
This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 53 stocks in its basket with Tesla occupying the top position at 11%. The ETF has amassed $6.9 billion in its asset base and charges 79 bps in annual fees. It trades in an average daily volume of 2.2 million shares.
ARK Industrial Innovation ETF (ARKQ - Free Report)
This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 47 stocks, with TSLA occupying the top spot with 10.6% share. The product has accumulated $3.3 billion in its asset base and charges 75 bps in fees per year. It trades in volume of 1.7 million shares a day on average.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>