Why EV ETFs Are Outpacing Tesla and BYD Stocks in 2025

The electric vehicle market just hit a major inflection point. According to the IEA’s World Energy Outlook (Nov 2025), global EV sales are projected to exceed 20 million units this year—a 17.6% YoY jump that represents over 25% of all new car sales worldwide. But here’s the catch: betting on individual EV stocks like Tesla or BYD might be riskier than you think.

The Problem with EV Mega-Caps

Tesla faces a brutal reality check. After its first-ever annual delivery decline in 2024, the company started 2025 with double-digit sales drops in Q1 and Q2. Q3 saw a temporary reprieve thanks to the expiring $7,500 federal tax credit, but Q4 is expected to contract again as incentives fade and Chinese competitors flood the market with cheaper alternatives. The real kicker? Tesla’s stock valuation is now almost entirely dependent on speculative bets on robotaxis and humanoid robots, not its core EV business.

Meanwhile, BYD—the world’s largest EV maker by volume—is getting crushed by its own aggressive pricing strategy. The price war in China has gutted margins, and sales momentum has stalled even in its home turf amid pressure from rivals like Xiaomi and Geely.

The ETF Play That’s Quietly Winning

While individual stocks battle company-specific headwinds, EV-focused ETFs are capturing the sector’s upside with way less company risk:

KARS (KraneShares EV & Future Mobility) leads the pack with a 49% YTD gain. Its diversified exposure spans EV makers (Tesla 4.17%, Xpeng 4.05%), battery giants (Panasonic 3.77%, BYD 3.10%), and charging infrastructure. AUM: $81.85M, expense ratio: 72 bps.

IDRV (iShares Self-Driving EV and Tech) is up 32.6% YTD. With 47 holdings focused on autonomous driving innovation, it hedges company-specific execution risk while capturing the AI-in-vehicles megatrend. AUM: $168.92M, expense ratio: 47 bps.

DRIV (Global X Autonomous & Electric Vehicles) has surged 28.5% YTD, providing exposure to 76 companies across autonomous tech, EV components, and battery materials. AUM: $330.38M, expense ratio: 68 bps.

HAIL (State Street Smart Mobility) offers a different angle with 19% YTD gains. It focuses on enabling technologies—hydrogen fuel cells (Ballard Power Systems 2.60%), optical components for battery manufacturing, and zero-emission systems. AUM: $21.16M, expense ratio: 45 bps (lowest fee).

The Bottom Line

The EV boom is real, but picking winners among Tesla, BYD, and Chinese competitors is a coin flip. ETFs democratize the upside while spreading risk across the entire supply chain—from raw materials to software to manufacturing. In a hyper-competitive market where margins are eroding and innovation cycles are shortening, owning the whole ecosystem beats betting the farm on one horse.