3 ETFs With Tesla Driving

Tesla remains one of the hottest companies on the market, with a P/E ratio of 143.62. However, it is also one of the most volatile stocks, meaning investors who want a cost-effective way to gain exposure to Tesla should consider investing in one of these three exchange-traded funds (ETFs) that include the California-based electric car company as a major holding.

Key Takeaways

• Tesla (TSLA) is one of the Magnificent Seven, a group of the 7 most valuable stocks in the U.S.
• While Tesla stock is highly sought-after, it also has a history of high price volatility, making investing in ETFs with significant TSLA holdings more attractive for some investors.
• Popular ETFs that TSLA drives include VanEck Vectors Low Carbon Energy ETF (SMOG), ARK Industrial Innovation ETF (ARKQ), and First Trust NASDAQ Clean Edge Green Energy ETF (QCLN).

VanEck Vectors Low Carbon Energy ETF (SMOG)

Launched in 2007, the VanEck Vectors Low Carbon Energy ETF (SMOG) seeks to provide similar returns to the Ardour Global Index Extra Liquid (AGIXLT). The fund achieves this by investing a minimum of 80% of its assets in small- and mid-capitalization low carbon energy companies that operate primarily in the alternative energy space which includes power derived principally from biofuels (such as ethanol), wind, solar, hydro, and geothermal sources. Tesla accounts for 5.41% of its portfolio, giving investors ample exposure to the electric car maker. Other top holdings in the fund include BYD Co. Ltd. (BYDDY) at 8.9% and Nextera Energy Inc. (NEE) at 7.58%.

The VanEck Vectors Low Carbon Energy ETF has a net expense ratio of 0.61% and has $120.6 million in net assets. As of Jan. 31, 2025, it has a five-year annualized return of 6.19% and a one-year annualized return of 6.47%. The fund also has a 30-day SEC yield of 1.21%.

ARK Industrial Innovation ETF (ARKQ)

The ARK Industrial Innovation ETF (ARKQ), formed in September 2009, invests in companies that are likely to benefit from automation or other forms of technological innovation and advancements. Although the fund invests in both domestic and foreign securities, the bulk of its exposure (86.12%) targets U.S. companies. Tesla is the fund’s top allocation at 11.26%. Teradyne Inc. (TER) and Kratos Defense & Security Solutions Inc. (KTOS) round out the ETF’s top three holdings.

The ARK Industrial Innovation ETF has net assets of $1.01 billion. Its expense ratio of 0.75% is higher than the 0.55% category average, but the fund’s outstanding performance warrants its higher management fees. As of Feb. 28. 2025, ARKQ has five- and one-year annualized returns of 16.85% and 56.18%, respectively. 

First Trust NASDAQ Clean Edge Green Energy ETF (QCLN)

The First Trust NASDAQ Clean Edge Green Energy ETF‘s primary objective is to track the NASDAQ Clean Edge Green Energy Index. The fund, created in 2007, achieves this by investing the majority of its assets in securities that make up the underlying index. This includes U.S.-listed companies that manufacture, develop, and install clean-energy technologies. QCLN has 9.9% of its portfolio in Tesla. The ETF’s other significant holdings include Rivian Automotive Inc. (RIVN) with a 7.19% weighting, First Solar Inc. (FSLR) with a 7.17% weighting, and ON Semiconductor Corporation (ON) with a 6.39% weighting.

The First Trust NASDAQ Clean Edge Green Energy ETF has an expense ratio of 0.59% and $510.39 million in net assets. While the fund has a 5.46% return over the past five years, it has experienced negative returns (-2.47%) over the past year.

Does Tesla Have an ETF?

The Simplify Volt TSLA Revolution ETF (TESL) seeks to provide capital appreciation by investing primarily in TSLA stock. TSLA makes up approximately 78% of the fund’s weight, with the remaining 22% made up of options to manage downside risk.

Is There an Inverse ETF for Tesla?

The T-Rex 2x Inverse Tesla Daily Target ETF (TSLZ) seeks daily investment returns of 200% of the opposite of the performance of Tesla, before fees and expenses.

Why Should You Pick a Tesla ETF over Tesla Stock?

For some investors, the volatility risk of TSLA stock outweighs its potential upside. These investors may prefer investing in an ETF that offers exposure to TSLA as well as similar companies.

The Bottom Line

While Tesla stock is extremely valuable, it’s not suitable for every investor. Some investors may prefer to invest in an ETF that is heavily weighted toward TSLA, such as SMOG, ARKQ, or QCLN. These ETFs provide you exposure to TSLA without having to invest directly in the stock itself.