Tesla’s (TSLA) stock has faced a steep decline of 33% in the year to date, driven by mounting challenges in the electric vehicle (EV) industry and company-specific headwinds. In Europe, Tesla’s sales dropped by a staggering 49% during the first two months of 2025 compared to the same period in 2024, despite a 28.4% surge in overall EV sales.
The company registered just 19,046 vehicles this year, down from 37,311 last year, as competitors like BYD (BYDDY) introduced innovative models and faster charging technologies that outshine Tesla’s lineup.
Globally, Tesla reported its first annual sales drop, delivering only 1.79 million vehicles in 2024 — a decline of 1.1% from the previous year. BYD, on the other hand, surged ahead with $107 billion in revenue and deliveries of 4.27 million vehicles.
Adding to Tesla’s troubles are production bottlenecks and CEO Elon Musk’s controversial political affiliations, which have alienated environmentally conscious consumers and sparked protests in key markets.
As Tesla’s stock continues its downward trajectory, the Direxion Daily TSLA Bear 1X Shares (TSLS) has emerged as a compelling option for those looking to capitalize on this decline. Let’s delve deeper into TSLS’s structure and performance.
Overview of TSLS ETF
The Direxion Daily TSLA Bear 1X Shares (TSLS) is a unique exchange-traded fund (ETF) offered by Direxion Investments. Launched on Aug. 9, 2022, TSLS is designed to deliver daily inverse investment results equivalent to -1x the performance of Tesla (TSLA) stock before fees and expenses.
This strategy makes TSLS an ideal tool for those seeking to profit from declines in Tesla’s stock price or hedge against potential losses in Tesla-related holdings. Unlike traditional ETFs that track diversified indices, TSLS focuses solely on Tesla’s stock, offering single-stock exposure.
TSLS has achieved a year-to-date return of 33.2%.
The fund’s assets under management (AUM) stand at $68.5 million, supported by robust trading volumes of 12,601,340 shares this month, up from 10,943,785 last month. These figures highlight the ETF’s growing popularity and liquidity in the market.
The ETF charges a management fee of 1.07%, or $107 on an initial $10,000 investment, which aligns with its specialized and leveraged nature.
TSLS’s strategy is straightforward: It seeks to provide the opposite daily performance of Tesla stock. For instance, if Tesla’s stock drops by 1% in a single trading day, TSLS aims to rise by approximately 1%. However, it’s crucial to note that the fund’s objectives are designed for single-day performance and may not align with longer-term trends, requiring careful monitoring and potential rebalancing for those holding positions beyond a day.
Structural Challenges Contributing to Tesla’s Decline
The controversy surrounding Elon Musk has become a major factor in Tesla’s struggles this year. His role as head of the Department of Government Efficiency (DOGE) under President Donald Trump has sparked backlash, while vandalism and boycotts at Tesla dealerships have surged across Europe and the U.S.
Meanwhile, Tesla faces stiff competition in the EV market, particularly from Chinese automaker BYD. BYD delivered 4.27 million vehicles in 2024, far outpacing Tesla’s 1.79 million. With annual revenue reaching $107 billion compared to Tesla’s $97.7 billion, BYD has strengthened its position through aggressive pricing, technological advancements like ultra-fast charging systems, and a diverse product lineup that includes hybrids and fully electric models. Legacy automakers such as Volkswagen (VWAGY) and Ford (F) are also ramping up their EV offerings, further eroding Tesla’s dominance.
Tesla’s production challenges add to its woes. Shutdowns at factories to retool for model refreshes have led to inventory shortages just as competitors flood the market with affordable alternatives. The Cybertruck, Tesla’s only new launch in years, has faced recalls and disappointing sales, while its other models are increasingly seen as outdated.
Analysts have responded by slashing price targets for Tesla stock. Wells Fargo predicts a drop to $130 per share, while JPMorgan lowered its target to $120, citing “no identifiable path to growth recovery.”
With political controversies, intensifying competition, production bottlenecks, and an aging product lineup weighing heavily on Tesla’s outlook, bearish sentiment continues to grow.
Conclusion
Tesla’s challenges in 2025 have created an environment where betting against its stock seems increasingly viable. From Elon Musk’s polarizing political involvement to intensifying competition from rivals, Tesla faces mounting pressure on multiple fronts. Declining sales, outdated models, and production issues have only added to its woes. With TSLS up 33% year-to-date, this ETF offers a straightforward way to capitalize on Tesla’s struggles.
