From Tesla To Nio: ETFs Poised To Ride The Software-First Automaker Boom - BYD CO LTD H SHS by BYD Co., L

Car manufacturers are no longer merely selling vehicles. Their products now include software, subscriptions, and AI-driven features.

The most recent Gartner Digital Automaker Index 2025 indicates that those who can manufacture cars using recurring-revenue software platforms will be the winners of the next decade.

For investors in ETFs, this poses a key question: Which funds provide exposure to the software-first vehicle manufacturers that Gartner expects to lead the way?

China-based manufacturers now have an average 53% digital score, outpacing U.S. counterparts (50%), and significantly outpacing Europe (33%) and Japan (26%). The largest movers: Nio Inc (NYSE:NIO), XPeng Inc (NYSE:XPEV), Xiaomi Corp (OTCPK: XIACF), Li Auto Inc (NASDAQ:LI), and Geely Automobile Holdings Ltd (OTCPK: GELYF).

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That bias makes ETFs with high China EV exposure of particular interest:

KraneShares Electric Vehicles & Future Mobility ETF (NYSE:KARS): Heavy exposure to Nio, BYD Co Ltd (OYCPK: BYDDF), Li Auto, and XPeng makes KARS an unabashed play on Gartner’s digital leaders.

Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV): More diversified. Nonetheless, DRIV still reflects the ascent of China’s digital-native EV manufacturers along with U.S. players such as Tesla Inc (NASDAQ:TSLA), in addition to suppliers such as Nvidia Corp (NASDAQ:NVDA) and Qualcomm inc (NASDAQ:QCOM) that facilitate SDV capabilities.

Legacy Automakers: Comeback Potential?

Gartner also highlighted Hyundai-Kia and Stellantis NV (NYSE:STLA) as the largest winners due to over-the-air update deployments, AI-driven voice assistants, and board-level tech appointments.

ETFs that include both legacy and next-gen players allow investors to hedge the risk of a comeback:

iShares Self-Driving EV and Tech ETF (NYSE:IDRV): Has exposure to automakers and facilitating tech (chips, connectivity, AI). Picked up both Tesla and the rapidly improving legacy names Gartner mentions, including Nio, XPeng, Li Auto, and BYD.

First Trust S-Network Future Vehicles & Tech ETF (NASDAQ:CARZ): A more conventional auto ETF, though still with exposure to automakers turning toward software-based models.

The Big Picture For ETF Investors

The vehicle industry is going from batteries to bytes. Subscription software, connected features, and AI assistants are the next huge revenue drivers, according to Gartner.

ETFs with a higher weighting towards Chinese digital-first automakers could offer more pronounced upside, while balanced funds provide safer exposure if legacy OEMs manage to catch up.

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