Tesla (NASDAQ: TSLA) has become an attractive stock to hold for many investors, with the EV company seen as an innovator in its market and appeals to the modern investor who is concerned with a company's environmental impact. This attractiveness lands Tesla on both tech and ESG (environmental, social and governance) exchange-traded funds (ETF), especially since the stock's inclusion in the S&P 500 Index (NYSE: SPY) last December.
According to data from TrackInsight, assets invested in Tesla through ETFs rose to $48.5 billion by the end of last year, the Financial Times reported, with over 500 ETFs holdings Tesla shares after it joined the market benchmark.
Tesla's Advantage
The EV giant stands out in its industry because it holds a large lead over its many competitors when it comes to saving money on lithium battery cell and producing the lowest cost EV battery packs, according to a new report from Cairn Energy Research Advisors, CNBC reports. Moreover, Tesla is expected to continue to have the lowest battery costs in the entire EV industry through 2030, Cairn ERA researchers predict.
"Tesla is definitely putting the hammer down on the accelerator pedal," said Sam Jaffe, managing director of Cairn ERA, quoted by CNBC. "They see this as the crucial period and they're building out their capacities. Look at what they're doing in Shanghai and in Berlin and now in Austin, Texas. They're just piling factory upon factory."
Cathie Wood, founder and CEO of the popular Ark Investment Management, believes that Tesla has at least a three years head start over its rivals when it comes to battery technology, software, autonomous data collection, and autonomous hardware, according to ETF Trends.
"During the past year, traditional automakers have struggled to produce an electric vehicle competitive with Tesla's as measures by range per dollar spent on batteries," Wood told ETF Trends in an interview. "As a result, even though a number of so-called Tesla-killers launched last year, our research indicates Tesla's share of the global EV market increase from 17% in 2018 to 18% in 2019."
Investing in Tesla
For those looking to invest in the EV stock, their are a few different investment options outside of just purchasing individual stock. Like investing in other parts of the market, it is usually a safer bet to invest through an ETF rather than pick and choose individual stocks.
First and foremost, Tesla holds a large weighting in the Global X Lithium & Battery Tech ETF (NYSE: LIT), with the fund giving exposure to the global mining and exploration of lithium, and its use in battery production. That means this ETF will benefit from the global expansion of EVs and other technologies powered by lithium batteries.
Tesla is also great for those interested in stock ETFs, with the stock being among the top ten holdings of both the SPDR S&P 500 ETF Trust (NYSE: SPY) and the Invesco QQQ Trust (NASDAQ: QQQ), with the latter being the largest holder with 1.76 million shares of the EV carmaker. These funds respectively track the S&P 500 Index and the Nasdaq Composite Index, so they move with the broader market.
Tesla is also a driver behind clean energy ETFs like VanEck Vectors Low Carbon Energy ETF (NYSE: SMOG) and First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ: QCLN). These funds are set to benefit from companies investing in climate friendly technologies as many look to become carbon neutral by 2050.
Unsurprisingly, Tesla also made its way into the top holding for two of Carrie Wood's actively managed funds: Ark Autonomous Technology & Robotics ETF (NYSE: ARKQ) and Ark Innovation ETF (NYSE: ARKK). The stock holds a weighting of almost 10% for both funds.