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Beyond Tesla: Why GM and Ford Heavy ETFs Could Be Safer Bets Now?
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Electric vehicle (EV) giant Tesla ((TSLA - Free Report) ) made a stunning comeback recently, with its third-quarter 2025 delivery numbers surging 7% year over year, comfortably surpassing the weak performance of the previous two quarters. However, this record delivery, which smashed past the market consensus of around 447,600 deliveries, according to estimates compiled by FactSet (as reported by CNBC), was largely driven by the U.S. federal EV subsidy, which expired in September and prompted a rush of buyers hoping to capture the $7,500 tax credit.
This suggests that the impressive third-quarter figures are not exactly indicative of the underlying demand picture for Tesla-made EVs, which still remains uncertain, and thus do not guarantee sustainable organic growth for the company, especially in the absence of the EV incentive. To this end, it is imperative to mention that the company’s CEO, Elon Musk, warned of potential turbulence for Tesla during its second-quarter 2025 earnings call in July, specifically noting that, with the expiration of U.S. federal EV tax credits in September, the company "could probably face a few rough quarters."
Thus, for investors in Tesla-heavy exchange-traded funds (ETFs) like the Simplify Volt TSLA Revolution ETF ((TESL - Free Report) ), T-REX 2X Long Tesla Daily Target ETF ((TSLT - Free Report) ), and Roundhill TSLA WeeklyPay ETF ((TSLW - Free Report) ), the next few months may not bode well as the market adjusts to a post-subsidy reality.
Beyond Tesla
In addition to the expiration of the federal EV subsidy expected to cause a potential demand cliff in North America, other key challenges that Tesla has been facing lately include fierce competition (especially from Chinese EV makers like BYD), as well as the ongoing need to manage expectations for its high-risk, high-reward ventures like Full Self-Driving and the Optimus humanoid robot.
Amid this backdrop, investors may find better value and stability in ETFs that focus on legacy automakers such as General Motors ((GM - Free Report) ) and Ford Motor ((F - Free Report) ). There are two primary reasons that might attract investors to this shift in focus.
First, while Tesla is heavily concentrated on EVs, GM and F have established, long-running operations across the entire automobile market. This diversification allows them to leverage profitable segments like internal combustion engine vehicles and hybrids to weather volatility in pure EV demand. Second, their decades of operation have endowed them with a more robust and mature international presence, including extensive supply chains and manufacturing footprints, making them less vulnerable to regional market fluctuations than a relatively younger company like Tesla.
Also, financially, while their growth may be slower, they offer lower valuations (price-to-earnings ratios) and generally lower volatility compared to Tesla, as their non-EV profits help stabilize results. This positions them to weather the anticipated post-subsidy EV market softening better.
3 ETFs to Watch
Based on the above discussion, investors seeking exposure to the auto sector with reduced single-stock risk may consider adding the following ETFs, which are heavily invested in legacy automakers, to their watchlist.
This fund offers exposure to companies from the S&P 500 Index that exhibit strong "value" characteristics. Its top five holdings include General Motors (2.94%) and Ford Motor (2.88%), and it does not include TSLA in its net assets.
RPV surged a solid 18.6% in the past six months. The fund charges 35 basis points (bps) as fees.
This fund provides exposure to U.S. manufacturing companies across the economy, including consumer cyclicals, technology, auto makers, and defense contractors, among others. General Motors (3.84%) and Ford Motor (3.15%) have weightage in its top 10 holdings. This fund does not include TSLA in its net assets.
MADE soared 41% in the past six months. The fund charges 40 bps as fees.
This fund offers exposure to large and mid-capitalization U.S. companies with high free cash flow yields. While GM or TSLA are not part of this fund, Ford (2.05%) has been one of the top 10 holdings in this ETF because of its solid cash flow metrics.
COWZ soared 17.4% in the past six months. The fund charges 49 bps as fees.
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Beyond Tesla: Why GM and Ford Heavy ETFs Could Be Safer Bets Now?
Electric vehicle (EV) giant Tesla ((TSLA - Free Report) ) made a stunning comeback recently, with its third-quarter 2025 delivery numbers surging 7% year over year, comfortably surpassing the weak performance of the previous two quarters. However, this record delivery, which smashed past the market consensus of around 447,600 deliveries, according to estimates compiled by FactSet (as reported by CNBC), was largely driven by the U.S. federal EV subsidy, which expired in September and prompted a rush of buyers hoping to capture the $7,500 tax credit.
This suggests that the impressive third-quarter figures are not exactly indicative of the underlying demand picture for Tesla-made EVs, which still remains uncertain, and thus do not guarantee sustainable organic growth for the company, especially in the absence of the EV incentive. To this end, it is imperative to mention that the company’s CEO, Elon Musk, warned of potential turbulence for Tesla during its second-quarter 2025 earnings call in July, specifically noting that, with the expiration of U.S. federal EV tax credits in September, the company "could probably face a few rough quarters."
Thus, for investors in Tesla-heavy exchange-traded funds (ETFs) like the Simplify Volt TSLA Revolution ETF ((TESL - Free Report) ), T-REX 2X Long Tesla Daily Target ETF ((TSLT - Free Report) ), and Roundhill TSLA WeeklyPay ETF ((TSLW - Free Report) ), the next few months may not bode well as the market adjusts to a post-subsidy reality.
Beyond Tesla
In addition to the expiration of the federal EV subsidy expected to cause a potential demand cliff in North America, other key challenges that Tesla has been facing lately include fierce competition (especially from Chinese EV makers like BYD), as well as the ongoing need to manage expectations for its high-risk, high-reward ventures like Full Self-Driving and the Optimus humanoid robot.
Amid this backdrop, investors may find better value and stability in ETFs that focus on legacy automakers such as General Motors ((GM - Free Report) ) and Ford Motor ((F - Free Report) ). There are two primary reasons that might attract investors to this shift in focus.
First, while Tesla is heavily concentrated on EVs, GM and F have established, long-running operations across the entire automobile market. This diversification allows them to leverage profitable segments like internal combustion engine vehicles and hybrids to weather volatility in pure EV demand. Second, their decades of operation have endowed them with a more robust and mature international presence, including extensive supply chains and manufacturing footprints, making them less vulnerable to regional market fluctuations than a relatively younger company like Tesla.
Also, financially, while their growth may be slower, they offer lower valuations (price-to-earnings ratios) and generally lower volatility compared to Tesla, as their non-EV profits help stabilize results. This positions them to weather the anticipated post-subsidy EV market softening better.
3 ETFs to Watch
Based on the above discussion, investors seeking exposure to the auto sector with reduced single-stock risk may consider adding the following ETFs, which are heavily invested in legacy automakers, to their watchlist.
Invesco S&P 500 Pure Value ETF ((RPV - Free Report) )
This fund offers exposure to companies from the S&P 500 Index that exhibit strong "value" characteristics. Its top five holdings include General Motors (2.94%) and Ford Motor (2.88%), and it does not include TSLA in its net assets.
RPV surged a solid 18.6% in the past six months. The fund charges 35 basis points (bps) as fees.
iShares U.S. Manufacturing ETF ((MADE - Free Report) )
This fund provides exposure to U.S. manufacturing companies across the economy, including consumer cyclicals, technology, auto makers, and defense contractors, among others. General Motors (3.84%) and Ford Motor (3.15%) have weightage in its top 10 holdings. This fund does not include TSLA in its net assets.
MADE soared 41% in the past six months. The fund charges 40 bps as fees.
Pacer US Cash Cows 100 ETF ((COWZ - Free Report) )
This fund offers exposure to large and mid-capitalization U.S. companies with high free cash flow yields. While GM or TSLA are not part of this fund, Ford (2.05%) has been one of the top 10 holdings in this ETF because of its solid cash flow metrics.
COWZ soared 17.4% in the past six months. The fund charges 49 bps as fees.