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Tesla ETF Bloodbath Continues as Nvidia Levels the Self-Driving Playing Field

MarketDash Editorial Team
1 day ago
Nvidia's move to democratize autonomous vehicle AI is rattling Tesla's competitive moat, and leveraged Tesla ETFs are feeling the pain with double-digit losses.

Here's the problem with betting big on Tesla's autonomous future: what happens when someone hands out the same technology to everyone else? That's essentially what Nvidia Corp. (NVDA) did this week at CES, and Tesla-linked ETFs are paying the price.

The ProShares Ultra TSLA ETF (TSLI) has collapsed roughly 27% from its December peak. Tesla shares themselves dropped 4.1% in a single session following Nvidia's announcement of Alpamayo, an open-source AI suite designed to turbocharge autonomous vehicle development. The threat isn't that Nvidia plans to build cars. It's that Nvidia just gave every other automaker the tools to catch up.

For years, the Tesla bull case has rested heavily on autonomy dominance. The thinking goes: Tesla builds the best self-driving software, launches a robotaxi network, and suddenly it's not a car company anymore but a high-margin AI services business. That vision has powered billions in inflows into leveraged funds like Direxion Daily TSLA Bull 2X Shares (TSLL), which pulled in nearly $4 billion during the first half of 2025 alone, according to data from Etfdb. But sentiment shifted hard in July, with consistent outflows ever since.

Nvidia's strategy complicates the narrative considerably. By selling the "brains" of autonomy to anyone willing to pay, the chip giant is essentially commoditizing what was supposed to be Tesla Inc. (TSLA)'s secret sauce. That erosion of competitive advantage translates directly into heightened volatility for leveraged Tesla products, which amplify daily moves in both directions.

The pain isn't confined to the obvious suspects. The Roundhill TSLA WeeklyPay ETF (TSLW), which targets enhanced weekly returns tied to Tesla's performance, has also struggled as sustained weakness compresses both net asset value and income generation potential. Meanwhile, the T-Rex 2x Inverse Tesla Daily Target ETF (TSLZ) hasn't exactly been a savior for bears either. Choppy price action and the mechanics of daily resets have prevented the inverse fund from consistently capitalizing on Tesla's decline.

Then there's the competition piling up in adjacent markets that Tesla is counting on for future growth. Autonomous driving and humanoid robotics are getting awfully crowded. Mobileye Global Inc. (MBLY) just dropped $900 million to acquire an AI humanoid robotics startup, a move that underscores how aggressively rivals are positioning themselves in territories Tesla investors consider sacred ground.

The timing of all this matters more than you might think. Revenue from robotaxis or humanoid robots remains years away from being meaningful. Yet Tesla still trades at approximately 192.3 times estimated 2026 earnings, according to data from Benzinga Pro. That's a valuation that prices in a lot of future magic. For leveraged ETFs like TSLI and TSLL, any downward revision of those sky-high expectations doesn't just hurt; it amplifies losses exponentially within days or even hours.

What we're watching now is less about fundamentals and more about faith. Tesla-linked ETFs have been trading on belief in the company's autonomous future, and Nvidia just introduced some healthy skepticism into that equation. The dream isn't dead, but it's definitely more contested. And when you're running leveraged exposure that magnifies Tesla's every twitch, competition is the last thing you want to see heating up.

Back to Stock Market News

Tesla ETF Bloodbath Continues as Nvidia Levels the Self-Driving Playing Field

MarketDash Editorial Team
1 day ago
Nvidia's move to democratize autonomous vehicle AI is rattling Tesla's competitive moat, and leveraged Tesla ETFs are feeling the pain with double-digit losses.

Here's the problem with betting big on Tesla's autonomous future: what happens when someone hands out the same technology to everyone else? That's essentially what Nvidia Corp. (NVDA) did this week at CES, and Tesla-linked ETFs are paying the price.

The ProShares Ultra TSLA ETF (TSLI) has collapsed roughly 27% from its December peak. Tesla shares themselves dropped 4.1% in a single session following Nvidia's announcement of Alpamayo, an open-source AI suite designed to turbocharge autonomous vehicle development. The threat isn't that Nvidia plans to build cars. It's that Nvidia just gave every other automaker the tools to catch up.

For years, the Tesla bull case has rested heavily on autonomy dominance. The thinking goes: Tesla builds the best self-driving software, launches a robotaxi network, and suddenly it's not a car company anymore but a high-margin AI services business. That vision has powered billions in inflows into leveraged funds like Direxion Daily TSLA Bull 2X Shares (TSLL), which pulled in nearly $4 billion during the first half of 2025 alone, according to data from Etfdb. But sentiment shifted hard in July, with consistent outflows ever since.

Nvidia's strategy complicates the narrative considerably. By selling the "brains" of autonomy to anyone willing to pay, the chip giant is essentially commoditizing what was supposed to be Tesla Inc. (TSLA)'s secret sauce. That erosion of competitive advantage translates directly into heightened volatility for leveraged Tesla products, which amplify daily moves in both directions.

The pain isn't confined to the obvious suspects. The Roundhill TSLA WeeklyPay ETF (TSLW), which targets enhanced weekly returns tied to Tesla's performance, has also struggled as sustained weakness compresses both net asset value and income generation potential. Meanwhile, the T-Rex 2x Inverse Tesla Daily Target ETF (TSLZ) hasn't exactly been a savior for bears either. Choppy price action and the mechanics of daily resets have prevented the inverse fund from consistently capitalizing on Tesla's decline.

Then there's the competition piling up in adjacent markets that Tesla is counting on for future growth. Autonomous driving and humanoid robotics are getting awfully crowded. Mobileye Global Inc. (MBLY) just dropped $900 million to acquire an AI humanoid robotics startup, a move that underscores how aggressively rivals are positioning themselves in territories Tesla investors consider sacred ground.

The timing of all this matters more than you might think. Revenue from robotaxis or humanoid robots remains years away from being meaningful. Yet Tesla still trades at approximately 192.3 times estimated 2026 earnings, according to data from Benzinga Pro. That's a valuation that prices in a lot of future magic. For leveraged ETFs like TSLI and TSLL, any downward revision of those sky-high expectations doesn't just hurt; it amplifies losses exponentially within days or even hours.

What we're watching now is less about fundamentals and more about faith. Tesla-linked ETFs have been trading on belief in the company's autonomous future, and Nvidia just introduced some healthy skepticism into that equation. The dream isn't dead, but it's definitely more contested. And when you're running leveraged exposure that magnifies Tesla's every twitch, competition is the last thing you want to see heating up.