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Time to Ride Tesla ETFs on Recent Stock Rebound & Robotaxi Launch?

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Tesla Inc. (TSLA - Free Report) shares have grabbed headlines this month. The stock lost 7% over the past month on the early-June Trump-Musk feud, only to recoup 13.9% gains last week.Trump expressed “disappointment” in Musk, questioning the Tesla CEO’s motives in opposing what he described as his “big, beautiful” economic bill (read: Tesla Stock Slumps on Trump-Musk Feud: Buy the Dip in ETFs?). 

Government Support for Tesla at Risk?

The conflict escalated as Trump suggested that he might revoke federal subsidies and government contracts that benefit Musk's companies, including Tesla and SpaceX. Meanwhile, Musk declared that he would consider decommissioning SpaceX's Dragon spacecraft and went as far as to endorse Trump’s impeachment, going against his previously supportive stance.

Tesla Among Top EV Stocks to Watch in 2025

Tesla continues to rank as one of the eight biggest electric vehicle (EV) stocks to monitor in 2025. CEO Elon Musk acknowledged recently that his comments about President Donald Trump “went too far.” This public apology helped ease investor concerns and marked a pivotal moment in Tesla’s recent market recovery.

TSLA Stock Rebounds After Musk’s Apology

The recent turnaround in Tesla shares is widely attributed to Musk’s attempt to mend ties with the U.S. government. His remarks had previously intensified regulatory uncertainty, which weighed heavily on investor sentiment. The apology now appears to be a strategic move to calm tensions and realign Tesla’s political standing.

Controversy Over Government Role and Public Backlash

Note that Musk had previously come under fire following his appointment as a “special government employee” for addressing waste reduction. The title drew criticism and even caused vandalism at Tesla dealerships, amid growing public backlash. Also, Elon Musk was accused of losing focus on Tesla.

In April, Tesla reported its lowest sales in three years.  Hence, Musk’s apparent distancing from Trump may help resolve the above-mentioned issues with Tesla sales.

Wedbush Finds Tesla-Trump Reconciliation “Mutually Necessary”

Analyst Dan Ives of Wedbush called the reconciliation between Musk and Trump “mutually necessary,” as quoted on Yahoo Finance. With Tesla set to debut its robotaxi service Cybercab in Austin on June 22, Ives believes this development could be a crucial milestone toward a $2 trillion valuation. According to him, Tesla’s growth trajectory is heavily dependent on its autonomy strategy.

AI Stocks May Offer Better Risk-Reward Profile

Musk’s inclination for artificial intelligence (AI) could come across as a savior in this situation. Musk projects Tesla as an AI company. Tesla is heavily investing in AI, primarily focusing on autonomous driving (Full Self-Driving), humanoid robots (Optimus), and a custom supercomputer (Dojo). These initiatives can save Tesla stock to some extent as AI is a hot proposition at present.

New Concern: Zero-Emission Vehicle (ZEV) Credits

Even as excitement builds around the robotaxi launch, there are worries related to zero-emission vehicle credits. These regulatory credits, which have been a key source of revenues for Tesla, could become a source of volatility moving forward, depending on how environmental policies evolve in the Trump era.

In any case, Trump is known for backing fossil fuels and pulling down policies that favor EVs over traditional internal combustion engine vehicles. 

Broker Rating

Tesla currently has an average brokerage recommendation (ABR) of 2.77 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 42 brokerage firms. The current ABR compares to an ABR of 2.68 a month ago based on 42 recommendations.

Of the 42 recommendations deriving the current ABR, 14 are Strong Buy and two are Buy. Strong Buy and Buy, respectively, account for 33.33% and 4.76% of all recommendations. A month ago, Strong Buy made up 38.1%, while Buy represented 4.76%

One analyst out of 12 raised the estimate for the June quarter over the past seven days, while none cut the same.

What to Do With the Tesla-Heavy ETFs?

Against this backdrop, it is better to stay on the sidelines when it comes to investing in Tesla shares or Tesla-heavy exchange-traded funds (ETFs). Investors should closely watch what the government does to support Musk’s companies.

Tesla-heavy ETFs include Simplify Volt TSLA Revolution ETF (TESL - Free Report) , Nightview Fund NITE (NITE - Free Report) , Roundhill TSLA WeeklyPay ETF (TSLW - Free Report) and Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) .

NITE lost 2.1% last week, while XLY retreated 0.1% and TSLW gained 16.4%. Meanwhile, TESL jumped 9.7%. Note that TSLW is designed for investors seeking a combination of income and growth potential. Meanwhile, the fund TESL 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. 


 

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