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Tesla's Shares Tumble: A Tactical Entry Point for ETF Investors?
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On Nov. 13, 2025, Tesla's ((TSLA - Free Report) ) share price slumped 6.6%, marking its worst single-day performance since late July. While this decline might unsettle some investors, it can also present a strategic entry point.
For those keen to capitalize on this momentary dip but wary of single-stock volatility, focusing on Exchange-Traded Funds (ETFs) that hold Tesla in their top ten holdings offers a strategic alternative. These ETFs, like the Consumer Discretionary Select Sector SPDR Fund ((XLY - Free Report) ), Vanguard Consumer Discretionary ETF ((VCR - Free Report) ), Global X Autonomous & Electric Vehicles ETF ((DRIV - Free Report) ), and iShares Self-Driving EV and Tech ETF ((IDRV - Free Report) ), provide heavy exposure to the electric vehicle market leader while diversifying across other companies.
Before digging deeper into these ETFs, let us first examine what caused Tesla’s share price to drop and whether this electric vehicle (EV) maker has what it takes to continue its rally in the coming years, in order to determine the long-term viability of Tesla-heavy ETFs.
Why Did Tesla Stock Slump?
While Tesla’s slide on the bourses was part of a broad sell-off in the technology sector, a confluence of a handful of other challenges has also kept the EV maker under pressure lately.
The EV market, particularly in China, is experiencing a brutal price war. The market is described as "imploding," with excessive investment and government intervention leading to an unsustainable glut of vehicles and slim profits for all players, with Tesla being no exception. Evidently, TSLA’s share of China’s EV market declined to 3.2% in October 2025 from 8.7% in September, marking its lowest level in over three years amid subdued demand (as reported by Reuters).
Furthermore, the company's valuation, which often reflects future growth expectations, is increasingly questioned by traditional analysts, especially after its recent third-quarter earnings missed Wall Street estimates. Tesla is trading at a forward 12-month earnings of 171.1X compared to its industry’s forward 12-month price/earnings of 89.88x.
Citing this premium to its industry’s valuation, some analysts have expressed caution that the stock is overpriced for its current fundamentals, which might have also led to the recent slump.
What Lies Ahead for Tesla?
Despite the near-term challenges, several innovative projects could fuel Tesla's long-term growth if successfully executed. The company is aggressively pivoting its narrative toward being an AI and robotics powerhouse, with ambitious, innovative ventures like the Optimus humanoid robot and the upcoming Robotaxi network.
Tesla has announced plans to build a 1 million-unit production line for its Optimus humanoid robot. CEO Elon Musk had earlier indicated that these non-automotive segments, particularly Optimus, could eventually represent up to 80% of Tesla’s future valuation (as mentioned in a CNBC report).
This potential pivot to "physical AI" and recurring revenue streams from autonomous driving should continue to boost Tesla’s growth in the coming years.
However, it is crucial for investors to remember that these transformative technologies are still in a nascent stage. Their real-world execution, profitability, and mass-market success remain hard to predict, posing a significant risk to the stock's current premium valuation.
A Diversified Approach Through ETFs
Given the high-risk, high-reward nature of Tesla’s story, gaining exposure through a Tesla-heavy ETF can be a smart move. ETFs like XLY or VCR include other industries’ established companies like Amazon ((AMZN - Free Report) ), which helps to diversify the risk associated with investing solely in Tesla. Likewise, EV-focused ETFs like DRIV and IDRV offer exposure to other EV players and related technology firms such as Rivian Automotive ((RIVN - Free Report) ), guarding against potential underperformance by Tesla alone.
Against this backdrop, we may suggest investors to keep the following ETFs in their watchlist at the moment.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This fund, with assets under management (AUM) worth $23.62 billion, offers exposure to 49 companies in specialty retail; broadline retail; hotels, restaurants and leisure; textiles, apparel and luxury goods; household durables; automobiles; automobile components; distributors; leisure products; and diversified consumer services. Its top three holdings include Amazon (23.86%), Tesla (20.16%) and Home Depot (6.16%).
XLY has gained 4.1% year to date. The fund charges 8 basis points (bps) as fees.
This fund, with net assets worth $6.4 billion, provides exposure to 292 stocks of U.S. companies within the consumer discretionary sector. Its top three holdings include Amazon (21.54%), Tesla (18.18%) and Home Depot (5.47%).
VCR has gained 2.3% year to date. The fund charges 9 bps as fees.
Global X Autonomous & Electric Vehicles ETF (DRIV - Free Report)
This fund, with net assets worth $334.15 million, provides exposure to 76 companies involved in the development of autonomous vehicle technology, EVs and EV components and materials. This includes companies involved in the development of autonomous vehicle software and hardware, as well as companies that produce EVs, EV components such as lithium batteries, and critical EV materials such as lithium and cobalt. Its top three holdings include Alphabet (3.75%), Bloom Energy (3.71%) and Tesla (3.17%).
DRIV has surged 29.2% year to date. The fund charges 68 bps as fees.
This fund, with net assets worth $171.08 million, provides exposure to 47 companies at the forefront of self-driving and EV innovation. Its top 10 holdings include Tesla (4.43%) and Rivian Automotive (3.80%).
IDRV has soared 34.1% year to date. The fund charges 47 bps as fees.
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Tesla's Shares Tumble: A Tactical Entry Point for ETF Investors?
On Nov. 13, 2025, Tesla's ((TSLA - Free Report) ) share price slumped 6.6%, marking its worst single-day performance since late July. While this decline might unsettle some investors, it can also present a strategic entry point.
For those keen to capitalize on this momentary dip but wary of single-stock volatility, focusing on Exchange-Traded Funds (ETFs) that hold Tesla in their top ten holdings offers a strategic alternative. These ETFs, like the Consumer Discretionary Select Sector SPDR Fund ((XLY - Free Report) ), Vanguard Consumer Discretionary ETF ((VCR - Free Report) ), Global X Autonomous & Electric Vehicles ETF ((DRIV - Free Report) ), and iShares Self-Driving EV and Tech ETF ((IDRV - Free Report) ), provide heavy exposure to the electric vehicle market leader while diversifying across other companies.
Before digging deeper into these ETFs, let us first examine what caused Tesla’s share price to drop and whether this electric vehicle (EV) maker has what it takes to continue its rally in the coming years, in order to determine the long-term viability of Tesla-heavy ETFs.
Why Did Tesla Stock Slump?
While Tesla’s slide on the bourses was part of a broad sell-off in the technology sector, a confluence of a handful of other challenges has also kept the EV maker under pressure lately.
The EV market, particularly in China, is experiencing a brutal price war. The market is described as "imploding," with excessive investment and government intervention leading to an unsustainable glut of vehicles and slim profits for all players, with Tesla being no exception. Evidently, TSLA’s share of China’s EV market declined to 3.2% in October 2025 from 8.7% in September, marking its lowest level in over three years amid subdued demand (as reported by Reuters).
Furthermore, the company's valuation, which often reflects future growth expectations, is increasingly questioned by traditional analysts, especially after its recent third-quarter earnings missed Wall Street estimates. Tesla is trading at a forward 12-month earnings of 171.1X compared to its industry’s forward 12-month price/earnings of 89.88x.
Citing this premium to its industry’s valuation, some analysts have expressed caution that the stock is overpriced for its current fundamentals, which might have also led to the recent slump.
What Lies Ahead for Tesla?
Despite the near-term challenges, several innovative projects could fuel Tesla's long-term growth if successfully executed. The company is aggressively pivoting its narrative toward being an AI and robotics powerhouse, with ambitious, innovative ventures like the Optimus humanoid robot and the upcoming Robotaxi network.
Tesla has announced plans to build a 1 million-unit production line for its Optimus humanoid robot. CEO Elon Musk had earlier indicated that these non-automotive segments, particularly Optimus, could eventually represent up to 80% of Tesla’s future valuation (as mentioned in a CNBC report).
This potential pivot to "physical AI" and recurring revenue streams from autonomous driving should continue to boost Tesla’s growth in the coming years.
However, it is crucial for investors to remember that these transformative technologies are still in a nascent stage. Their real-world execution, profitability, and mass-market success remain hard to predict, posing a significant risk to the stock's current premium valuation.
A Diversified Approach Through ETFs
Given the high-risk, high-reward nature of Tesla’s story, gaining exposure through a Tesla-heavy ETF can be a smart move. ETFs like XLY or VCR include other industries’ established companies like Amazon ((AMZN - Free Report) ), which helps to diversify the risk associated with investing solely in Tesla. Likewise, EV-focused ETFs like DRIV and IDRV offer exposure to other EV players and related technology firms such as Rivian Automotive ((RIVN - Free Report) ), guarding against potential underperformance by Tesla alone.
Against this backdrop, we may suggest investors to keep the following ETFs in their watchlist at the moment.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This fund, with assets under management (AUM) worth $23.62 billion, offers exposure to 49 companies in specialty retail; broadline retail; hotels, restaurants and leisure; textiles, apparel and luxury goods; household durables; automobiles; automobile components; distributors; leisure products; and diversified consumer services. Its top three holdings include Amazon (23.86%), Tesla (20.16%) and Home Depot (6.16%).
XLY has gained 4.1% year to date. The fund charges 8 basis points (bps) as fees.
Vanguard Consumer Discretionary ETF (VCR - Free Report)
This fund, with net assets worth $6.4 billion, provides exposure to 292 stocks of U.S. companies within the consumer discretionary sector. Its top three holdings include Amazon (21.54%), Tesla (18.18%) and Home Depot (5.47%).
VCR has gained 2.3% year to date. The fund charges 9 bps as fees.
Global X Autonomous & Electric Vehicles ETF (DRIV - Free Report)
This fund, with net assets worth $334.15 million, provides exposure to 76 companies involved in the development of autonomous vehicle technology, EVs and EV components and materials. This includes companies involved in the development of autonomous vehicle software and hardware, as well as companies that produce EVs, EV components such as lithium batteries, and critical EV materials such as lithium and cobalt. Its top three holdings include Alphabet (3.75%), Bloom Energy (3.71%) and Tesla (3.17%).
DRIV has surged 29.2% year to date. The fund charges 68 bps as fees.
iShares Self-Driving EV and Tech ETF (IDRV - Free Report)
This fund, with net assets worth $171.08 million, provides exposure to 47 companies at the forefront of self-driving and EV innovation. Its top 10 holdings include Tesla (4.43%) and Rivian Automotive (3.80%).
IDRV has soared 34.1% year to date. The fund charges 47 bps as fees.