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Is It Time to Buy Electric Vehicle ETFs Instead of Tesla?

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Tesla (TSLA - Free Report) shares lost 64% in the past one year as rising rates and controversies surrounding CEO Elon Musk’s Twitter buying and Tesla shares selling led to the crash in the electric vehicle maker. Tesla retreated about 24% past month.

Last week, Tesla was up 2.2% while Lucid Group (LCID - Free Report) shares gained 9.6%, Nio (NIO - Free Report) shares added 20% and Canoo (GOEV - Free Report) shares increased about 23%. 

Are Other EV Makers Better Bets?

Founded in 2014, the Chinese EV start-up Nio has been recording a boom in sales. In 2022, Nio grew EV sales 34%. Nio's EV sales jumped 60% in the final quarter of 2022. In 2021, Nio more than doubled EV sales. Those gains were realized despite the pandemic. The company runs a battery rental business and intends to manufacture its own battery packs from 2024.

Nio is expected to record 89.1% sales growth in 2023, per Zacks Consensus Estimate while earnings growth is expected to be 43.6%. Lucid is expected to witness 185.3% sales growth, though earnings growth is expected to be negative 16.22%. Meanwhile, Tesla is expected to post 35.11% sales growth against earnings growth of 21.95%.

Per, Nio targets China's market for premium electric SUVs and cars. By 2030, EVs will constitute 90% of new car sales in China, Nio CEO William Li foresaw. In short, the EV war is gaining momentum and Tesla may end up seeing tough challenges ahead.

But then, electric vehicle maker Tesla is slashing prices in the United States and throughout Europe again to boost demand. The move in the United States may help Tesla attain more federal EV tax credits, and boost sales volume as competition and interest rates increased. Hence, it is necessary for Tesla to make some moves to alleviate stiff competition.

Paul Gong, a UBS analyst, said that “ Tesla’s sales could rebound in January and February buoyed by its price cuts,” as quoted on South China Morning Post. Against this backdrop, below we highlight a few electric vehicle ETFs so that investors can make the most of the global developments in the EV market. This would help investors steer clear of company-specific concentration risks.

ETFs in Focus

Global X Autonomous & Electric Vehicles ETF (DRIV - Free Report)

AUM: $824.95 million

YTD Performance: 12.73%

KraneShares Electric Vehicles & Future Mobility Index ETF (KARS - Free Report)

AUM: $192.9 million

YTD Performance: 11.23%

SPDR S&P Kensho Smart Mobility ETF (HAIL - Free Report)

AUM: $59.63 million

YTD Performance: 12.37%

Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares (EVAV - Free Report)

AUM: $2.49 million

YTD Performance: 29.75%


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