1 Electric Vehicle ETF to Buy With 2025 Around the Corner

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Electric vehicle (EV) companies like Tesla (NASDAQ: TSLA) have experienced incredible growth over the past decade, but they have suffered from softening demand in major markets like the U.S. and Europe in 2024.

Tough economic conditions headlined by high interest rates have pushed consumers to buy cheaper gas-powered cars. Plus, a recent study by Goldman Sachs suggests a lack of rapid charging infrastructure, and falling prices in the used market are becoming a concern as more EVs hit the road.

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Tesla's EV deliveries could shrink this year for the first time since the company launched its flagship Model S in 2011. However, its CEO, Elon Musk, believes sales could grow by up to 30% in 2025 as interest rates fall, and because of the growing focus on autonomous driving.

The Global X Autonomous and Electric Vehicles ETF (NASDAQ: DRIV) can give investors broad exposure to that trend. Here's why the exchange-traded fund could be a great addition to any portfolio.

A person riding in a futuristic self-driving robotaxi.
Image source: Getty Images.

Big tech companies are dominating the autonomous driving space

Legacy manufacturers like Toyota, Volkswagen, General Motors, and Ford Motor Company still produce most of the world's cars. However, the EV industry is dominated by newer companies like Tesla and China-based BYD, and when it comes to autonomous driving technology, legacy automakers barely have a foothold at all.

In fact, the Global X ETF holds 75 different stocks, and three of its top five positions aren't car companies at all:

Stock

Global X Portfolio Weighting

1. Nvidia

3.52%

2. Tesla

3.34%

3. Microsoft

3.02%

4. Alphabet Class A

2.87%

5. Toyota

2.72%

Data source: Global X. Portfolio weightings are accurate as of Oct. 28, 2024, and are subject to change.

Nvidia is best known for its powerful graphics processing units (GPUs) for the data center, which are used for developing artificial intelligence (AI) models. However, the company also created a platform called Drive, which provides car manufacturers with all of the hardware and software they need to install autonomous driving capabilities into their vehicles. Leading brands like Mercedes-Benz and Tata Motors (Range Rover and Jaguar) are just some of Nvidia's customers in this space.

Tesla is one of the leading developers of self-driving technologies. In October, it unveiled its new Cybercab robotaxi EV, which is capable of autonomously hauling passengers -- it doesn't even have a steering wheel or pedals. It will go into mass production in 2026, and Musk believes the company will make up to 4 million of them per year.