Perhaps one of the biggest events in its company history arrives today when Tesla TSLA holds its highly anticipated Battery Day.
Prior to the event itself, CEO Elon Musk tempered expectations, sending the stock lower in the process, saying that “high volume” battery cell output won't commence until 2022. That affects the company's Cybertruck, Tesla Semi and Roadster platforms.
The electric vehicle maker will continue purchasing, not reduce, batteries from outside suppliers. With all that out in open, it remains to be seen how Battery Day will thrill investors or move Tesla stock. For those preparing for those possibilities, the following exchange-traded funds are worth considering.
VanEck Vectors Low Carbon Energy (SMOG)
The VanEck Vectors Low Carbon Energy SMOG is a clean energy ETF that may not be getting the exposure it deserves because it's a more than adequate ETF proxy on Tesla with a 16.49% weight to the stock. That's among the largest of all ETFs and nearly 700 basis points more than the weight assigned to SMOG's second-largest component.
SMOG is a diverse play on alternative energy and requires member companies to generate at least half their revenue from clean energy endeavors.
SMOG holdings include producers of bio-fuels (such as ethanol), wind, solar, hydro and geothermal sources, according to the issuer.
ARK Autonomous Technology & Robotics ETF (ARKQ)
The ARK Autonomous Technology & Robotics ETF ARKQ is one of three ARK ETFs with significant Tesla exposure. In the case of this actively managed fund, Tesla is the largest holding at a weight of 11.43% as of the Sept. 21 close.
ARK has long been bullish on Tesla and right in that thesis. While the fund manager has drawn both praise and criticism for seemingly high price targets on Tesla, ARK takes a long-term view of the electric vehicle opportunity set, often unearthing concepts before other research outfits. Consider the firm's take on the ride-hailing opportunity Tesla could eventually capitalize on.
“Based on ARK’s analysis, 20,000 ride-hailing service miles and 13,500 personal use miles per year, the cost to operate a Tesla Model 3 will be roughly 26 cents per mile, 30% lower than the 38 cents per mile to operate a Toyota Camry,” said ARK analyst Tasha Keeney in a recent note. “Tesla’s cost per mile advantage could play out in a number of ways: higher take-home pay for drivers, lower prices than Uber and Lyft, and/or higher platform fees for Tesla. A combination of all three could be possible.”
SPDR NYSE Technology ETF (XNTK)
The SPDR NYSE Technology ETF XNTK is a hidden gem among technology ETFs, though it's neither new nor small. XNTK is 20 years old and has nearly $481 million in assets under management. It has a 12.17% weight to Tesla, making that stock by far the largest of the ETF's 35 holdings.
To be included in XNTK, companies must meet one of the three following criteria as outlined by State Street: “(i) have an increase in sales over the last twelve months, (ii) have only one consecutive quarter of negative sales growth over the last two years, or (iii) have revenue totals from the last four quarters that classify it within the top 75 companies within the specific industry classification.”
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