Yahoo Finance Will Tesla's Cybertruck Push Up ETFs Heavy on the EV Maker?
According to a tweet from Tesla TSLA on Jul 15, the company has finally completed the construction of its first Cybertruck at its manufacturing facility in Austin, TX. According to Reuters, this achievement comes after a two-year delay. Back in 2019, Elon Musk, the founder of Tesla, unveiled the pickup truck, during which the vehicle's designer accidentally broke the supposedly indestructible "armor glass" windows.
Since then, Tesla has faced multiple setbacks and had to postpone the production timeline. Last year, Musk attributed the delay to component shortages for the Cybertruck. However, during a shareholder meeting in May, Musk expressed the company's goal of manufacturing around 250,000 Cybertrucks annually, depending on market demand.
The launch of the Cybertruck will allow Tesla to enter one of the most lucrative sectors of the U.S. market, providing competition to electric pickups offered by Ford Motor F and Rivian Automotive RIVN. Although both Ford and Rivian have already introduced their respective models in limited quantities, Tesla's entry into this segment is highly anticipated.
Strong Quarterly Growth to Drive Profits?
Tesla's aggressive pricing cut strategy, aimed at boosting sales and fending off competition, likely fueled its most robust revenue growth in five quarters. However, per Reuters, Tesla's earnings on Jul 19, are expected to show to a decline in profit margins, reaching a three-year low for the April to June period. The electric vehicle manufacturer initiated a price war in late 2022 to stimulate demand and counter competition posed by traditional automakers like Ford Motor and Chinese counterparts like BYD.
Although only marginally higher than the prior three months, the second quarter's growth in Tesla vehicle deliveries can be linked to the company's significant discounts, which came at the expense of its profit margins.
In an effort to expand its revenue streams amid a slowdown in electric vehicle (EV) sales, Tesla has taken assertive steps to gain a larger market share in the U.S. charging industry. By collaborating with notable companies such as Ford Motor and General Motors GM, Tesla has facilitated the adoption of its North American Charging Standard, which has propelled Tesla's market value to $880 billion.
While the immediate impact on second-quarter revenue due to these partnerships is expected to be minimal, with Refinitiv projecting a 45.2% increase to $24.59 billion, analysts anticipate a significant boost to Tesla's top line in the future.
By diversifying into the charging market and establishing itself as a prominent standard, Tesla aims to mitigate the effects of sluggish EV sales and tap into new avenues for revenue generation.
ETFs in Focus
Against this backdrop, investors can keep a tab on Meet Kevin Pricing Power ETF PP, Consumer Discretionary Select Sector SPDR Fund XLY, Fidelity MSCI Consumer Discretionary Index ETF FDIS, ARK Autonomous Technology & Robotics ETF ARKQ and Vanguard Consumer Discretionary ETF VCR.
The above-mentioned ETFs have an exposure of 22.64%, 19.82%, 15.48%, 14.44% and 13.39%, respectively, in Tesla. These ETFs have also given returns of 59.11%, 36.11%, 34.15%, 40.75% and 34.16%, respectively (as of Jul 17, 2023).
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ford Motor Company (F) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports
ARK Autonomous Technology & Robotics ETF (ARKQ): ETF Research Reports
Fidelity MSCI Consumer Discretionary Index ETF (FDIS): ETF Research Reports
The Meet Kevin Pricing Power ETF (PP): ETF Research Reports
Rivian Automotive, Inc. (RIVN) : Free Stock Analysis Report
