Tesla's (NASDAQ: TSLA) challenges have been numerous in 2025, and investors can be forgiven for wanting to take a mulligan and perhaps redo the past six months. The electric vehicle (EV) maker is facing sales declines in key markets, backlash from consumers due to CEO Elon Musk's political antics, and another massive price cut from BYD in China, among other headwinds.

Finally, some good news for Tesla investors to chew on: driverless vehicle testing and Musk's political exit.

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Robotaxi testing

Tesla might really be doing this whole robotaxi thing, after years of overpromising on its strategy to eventually derive most of the company's value through its Robotaxi ambitions.

In fact, it may already be happening under our noses. According to CEO Elon Musk via his X account, Tesla has been testing self-driving Model Y vehicles with no one in the driver's seat for several days on the public streets of Austin, Texas. This isn't exactly news, considering Tesla promised to launch the robotaxi service in June, but nobody would blame investors for being skeptical the automaker would once again fall short of expectations.

More specifically to the launch of driverless technology, Tesla will do a slow rollout, with plans to geofence its vehicles to the "safest" parts of Austin. It will initially start with a few Tesla-owned Model Ys before planning to grow to roughly 1,000 vehicles within a few months.

Tesla investors will be holding their collective breath during the initial rollout because the danger is real, competitors and critics are watching, and the stakes are high. Remember, General Motors invested billions into its Cruise driverless vehicle subsidiary before throwing in the towel after a pedestrian incident (among other challenges).

Tesla Cybercab. Image source: Tesla.

There's at least one person in Tesla's corner, however. "There will be many setbacks, but given its unmatched scale and scope globally, we believe Tesla has the opportunity to own the autonomous market," said Dan Ives, an analyst at Wedbush Securities, according to Automotive News. "The march to a $2 trillion valuation for Tesla over the next 12 to 18 months has now begun."

Back to work

No, this subhead isn't regarding remote workers moving back to the office, but rather the company's controversial CEO exiting his role with the Trump administration. Musk is allegedly back to working 24/7 and sleeping at the Tesla factory.

On May 28, Musk again took to his X account to thank President Donald Trump for his time working with Department of Government Efficiency, or DOGE, and a White House official confirmed with Reuters the information, adding, "Off-boarding will begin tonight."

As much of the consumer backlash, protests, and brand defections were driven by Musk's political antics, investors should be thrilled to hear this adventure is coming to an end. It's likely to blow over in time. At the end of the day, 2025 still brings many challenges for the automaker facing sales adversity for essentially the first time, but these two developments were at least a breath of fresh air for Tesla investors tired of taking in the bad news.

While Tesla might look like a buying opportunity right now, and it very well could prove to be long-term, investors would be wise to wait and see the direction of the company first. Currently, it feels like a company torn between manufacturing cars, ramping up robotaxi business, or developing artificial intelligence (AI) and robotics.

Either way, stay tuned: Tesla's story is still in the early innings.

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Unless you've been purposely avoiding the news, you've surely heard about the Trump administration's tariffs. While Trump has used tariffs as bargaining chips and to influence foreign policy, the auto industry has been concerned that it could see raised prices, reduced sales, and less profit.

For Rivian Automotive (NASDAQ: RIVN) investors, there's a little bit of good news on the tariff front and with one strategy it used to offset some of the tariff headwinds.

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Image source: Rivian.

Relief is coming

The first bit of good news for Rivian investors is the Trump administration's tariff relief. Currently, there's a 25% tariff on imported vehicles, and a 25% tariff on vehicle parts that began on May 3.

A couple of executive orders are expected to provide some relief for the automotive industry. Essentially, for a vehicle with 50% imported parts, the automaker would only have to pay tariffs on 35% of the vehicle for the first year. The rebate is then lowered in year two and then phased out. That means that a vehicle with 85% domestic parts will avoid tariffs during the first year – it should be noted 85% is a high percentage of domestic parts.

A separate executive order noted that automakers would pay only up to a 25% tariff on a vehicle and its parts, and would not have to pay additional import taxes on aluminum and steel used in the vehicle, or because it was imported from Canada or Mexico.

While the relief is welcomed, not everyone thinks it's hugely helpful. One such person is Dan Ives, managing director of autos at Wedbush Securities, according to the Detroit Free Press: "It's akin to having a car accident and saying, 'Oh good, it's not totaled, but it's still $20,000 worth of damage.'"

Rivian's quiet gamble

In a strategic move, Rivian quietly began building a reserve of electric vehicle (EV) batteries from Asia ahead of the Trump administration's tariffs. The small gamble is paying off and gives the company a little insurance against the tariff pressure being applied on the entire automotive supply chain.

Rivian even acquired a supply of lithium-iron phosphate cells from China's Gotion High-Tech Co. before the U.S. election and more recently worked with cell supplier Samsung SDI to move a substantial amount of battery inventory to the U.S. from South Korea.

Ultimately, the moves should help ease potential supply chain complications and costs from the tariffs, but it won't last forever. Rivian will have higher domestic parts usage than mainstream automakers, such as Ford Motor Company and General Motors, but the tariffs on parts will still sting the automaker.

What it all means

The tariff relief, even if not as helpful as investors would like, is welcomed by the automotive industry, and Rivian's foresight to stockpile battery supplies ahead of the tariff announcements was a smart move to help offset some of the near-term costs. It's important, because the battery cells that Rivian uses from vehicle electrification specialist Gotion largely go in its commercial delivery van, primarily for Amazon.

But 2025 is still setting up to be a lackluster year for Rivian as sales for its R1 vehicles seem to have peaked, and the launch of its R2 model -- more modestly priced to appeal to a larger swath of customers -- won't happen until 2026, and it can't come soon enough.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.

Investors knew 2025 could be a slow year for Rivian Automotive (NASDAQ: RIVN). The company's next vehicle launch, the highly anticipated R2, won't hit roads until 2026, and the company lacks any real visible catalysts. The good news for investors is that the automaker is finally gearing up to do a big marketing push, and it should provide a boost to stagnating sales.

What's going on?

Rivian's customers are passionate and invested in the brand, even though it's a relatively small player in the electric vehicle (EV) market. Independently run Rivian Clubs of America are in 35 states and Washington, D.C., and Rivian plans to tap into its passionate consumer base for its first big marketing campaign.

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The campaign, called "Real Rivian Adventures," takes real stories from real Rivian owners and turns them into advertisements. One example, an advertisement called "Last Lemonade Standing," was conjured from a Rivian owner's Facebook post and has a neighborhood boy using a Rivian outlet to blend lemonade slushies to outdo a competing stand.

According to Denise Cherry, Rivian's vice president of marketing, it's the first ad in a series spotlighting owner stories that will include streaming services, social media, and possible buys on broadcast TV.

Rivian's R1T. Image source: Rivian.

Needing a spark

Rivian's marketing push comes at a good time considering its sales have been lackluster in 2025. In fact, first-quarter sales declined 36%, driven lower by fewer commercial van deliveries and weak demand, partially due to the impact of L.A. fires in a crucial California EV market. Rivian reaffirmed its full-year delivery guidance of 46,000 to 51,000 vehicles -- roughly in line with the prior year's 51,579 deliveries.

Data source: Rivian press releases. Chart by author.

The upcoming R2, R3, and R3X will open the door to a more mainstream consumer thanks to their lower price tag. Rivian R1T and R1S start at roughly $70,000 and $75,900, respectively, but the R2 price tag will check in around $45,000.

"We are hyper-focused on how we start to ramp our awareness, get our brand out into the hearts and minds of consumers ahead of that release," Cherry said in an interview, according to Automotive News.

What it all means

2025 was to be a quiet year for Rivian, but the move to shake things up and grow brand awareness with a big marketing push could deliver just the spark Rivian's sales need. Further, increasing brand awareness ahead of the R2 launch is a big step forward for the company.

Rivian really needs to the R2 to be a hit with consumers, provide a spark to sales, and hopefully increase the company's scale with additional production volume. The good news is that the R2 is on track for its launch date, and the company has made construction progress on its Normal, Illinois plant, which will be the first place the R2 is produced. Once construction finishes, the plant will be able to produce 215,000 vehicles annually, up from the status quo of 150,000 vehicles.

Rivian remains a highly speculative and risky stock to own, and it should remain a small position in any portfolio. But if the R2 is a big hit, 2026 should be a strong year for the young EV maker.

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If you listen to the general narrative in the automotive industry, it's a dire one that warns of highly affordable and advanced Chinese electric vehicles (EVs) sweeping the globe in dominating fashion. There's certainly a lot of truth to that narrative, but many promising EV companies in China are busy battling themselves amid a brutal price war.

Nio (NYSE: NIO) is included, and despite the ongoing Chinese price war, the company has a couple of reasons for investors to remain optimistic.

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Profitable battery swaps?

For many investors, it feels like a double edged sword when it comes to Nio's battery swap ambitions. On one hand, it gives the company a unique competitive advantage since it has built out a leading battery-as-a-service network. On the other hand, it's quite an expensive endeavor for a company burning cash as profits remain in the distance.

There are positive signs for the battery-swap strategy. Only recently, Nio saw demand for these services spike to a record high 136,720 swaps in a single day on Feb. 3. The period from Jan 28 to Feb. 4 was China's New Year Holiday, with travel peaking before and after the dates. Between Jan. 22 and Feb. 5, Nio provided over 1.7 million battery swaps, a strong 44% increase compared to the prior year.

There are also signs that its customers prefer the option once they've tried it. During the previously mentioned time frame, 83.2% of the power added by Nio users on the highway came from battery swap stations. The even better news: This chunk of Nio's business and capital expenditures could break even by the end of 2026, according to a team at Chinese brokerage Western Securities.

The problem with Nio's battery swap business currently is that there simply isn't enough volume of swaps to generate enough revenue to cover day-to-day operations. According to Chief Financial Officer Stanley Qu, a battery swap station can break even if it serves 60 to 70 motorists a day. That's exactly what should happen, according to the analyst team. As new brands and new models ramp up in production and deliveries, more Nio users will use the battery swap technology.

A path to doubling sales

Nio has come a long way since launching the first ES8 premium SUV in 2018. The company now sells a list of options under its premium brand Nio, and began deliveries of its second brand, Onvo, late in 2024. Its third brand, Firefly, is set to begin deliveries in 2025 while continuing to accelerate production throughout the year.

Its second and third brands are intended to open the door to a much larger addressable audience with lower price tags. Management said on last November's earnings conference call that it was confident it could double sales in 2025 while still targeting 2026 for profitability.

That means Nio expects to deliver roughly 440,000 vehicles in 2025 on the backs of its newest brands and models. Not only would that do wonders for Nio's revenue, but the additional production capacity being used would also help the company's gross margin -- something that would be greatly appreciated by investors amid a brutal price war in China.

Is Nio a buy?

Nio has always been a compelling and unique option, thanks in part to its leading battery-swap network. The company's premium Nio brand has been well received, and its two newest brands, Onvo and Firefly, are poised to help double deliveries this year.

But the stock has shed 80% of its value over the past three years, the company is burning cash, and it faces a price war in China and tariff uncertainty overseas.

There's a lot of risk that comes with investing in companies such as Nio, but a lot of upside as well. Nio should always remain a small position in any portfolio, but despite a slow start to 2025 the company should begin succeeding on all its plans sooner, rather than later.

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It's been a wild ride for investors in Rivian Automotive (NASDAQ: RIVN) and Nio (NYSE: NIO), filled with ups and downs. Both companies have previously had solid momentum behind them, and faced headwinds, setbacks, or disruptions. Both also still have much to prove to investors.

One analyst recently cast doubt on Rivian's gross profit, and Nio will need to show that it can offset the effects of China's brutal price war. Let's dive into both electric vehicle (EV) makers below and see what may lay ahead for them.

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Gross profit in doubt?

One of the biggest takeaways from Rivian's fourth quarter was that it achieved $170 million in gross profit, which is simply total revenue minus the cost of revenue. It was a sizable win compared to analysts' estimates of $49 million in gross profit and was the company's first quarterly gross profit in its short history.

While the company certainly made progress -- Rivian's cost of revenue dropped 18.6% while revenue spiked 31.9% higher -- there was a small drawback. That came in the form of sharply higher sales of regulatory credits, which added $299 million in revenue during the fourth quarter. Regulatory credits are awarded to automakers that produce and sell electric vehicles, and the excess can be sold to other automakers that need the credits to meet emissions standards.

Rivian expects sales of regulatory credits to be similar for 2025 and guided for a positive gross profit for the full-year. Doing so would be a big step toward proving to investors that it has a path to profitability.

At least one analyst disagrees with Rivian's management. Bernstein's Daniel Roeska warned that the company may fail to reach that goal until 2027.

It's true that Rivian will face challenges. Its delivery growth has stalled, so much of the automaker's gross profit improvement will come from a reduction in revenue costs. The company lacks a revenue catalyst, with the R2 not set to hit the roads until the first half of 2026.

Gross profit will be something that analysts and investors both focus on throughout 2025, and it would go a long way if Rivian could achieve its full-year positive gross profit.

Where art thou, revenue growth?

Meanwhile, Nio is expected to see strong momentum throughout 2025, driven by two new brands, Onvo and Firefly. In fact, during Q4, the company's deliveries broke down to 52,760 from its premium Nio brand and 19,929 from its Onvo brand. As deliveries of both Onvo and Firefly accelerate it is expected to drive strong revenue and delivery growth, but that didn't materialize quite as expected during Q4 with Firefly only having just launched.

Nio's Q4 deliveries were up 45% compared to the prior year, but its total revenue jumped a much lesser 15.2%, suggesting that the exhaustingly brutal price war in China is having a large effect on its pricing power.

Nio's first-quarter deliveries were in line with management's guidance at 42,094. But investors must remember the disappointment from that guidance, as it fell far short of analysts' original expectation of 65,000 in deliveries.

Information source: Nio delivery press releases. Graphic source: Author.

Something to prove

Over the past three years, Rivian and Nio have shed 70% and 82% of their value, respectively, and both certainly have much to prove to investors on their way toward profitability. It won't happen overnight, but if Rivian can achieve full-year 2025 gross profit, perhaps even with less reliance on regulatory credit sales, and Nio can offset the weight of China's price war, both will set themselves up for a much brighter future.

Should you invest $1,000 in Rivian Automotive right now?

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The markets received good news when it was announced that President Donald Trump would pause reciprocal tariffs on most countries for 90 days and is opting to implement a base 10% tariff on most goods. Automakers, however, didn't catch a break as the pause didn't extend to the 25% duty on vehicle imports.

Worse yet, the automotive industry is expected to get slapped with an additional 25% tariff on automotive parts next month. The problem for General Motors (NYSE: GM) investors is that this could force the company to change one thing it's done really well recently: buying back shares.

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Share buybacks

When it comes to share buybacks, General Motors has been in overdrive, eating up shares in recent years. Between 2023 and 2025, GM announced $16 billion in share buybacks, and it's had a significant impact on how the stock has traded. That's a huge amount when you consider that the Detroit automaker has a market capitalization of $45 billion. As GM started buying back large amounts of shares, you can see the impact on the stock price.

GM data by YCharts

The trend continues as GM just announced recently it approved a $0.03 per share increase to the dividend, or a 25% hike, and also a new $6 billion share repurchase authorization. Further, the automaker began an accelerated share repurchase program to execute $2 billion of the authorization in the near term.

Turbulent tariffs

Unfortunately, General Motors is perhaps the worst of its domestic peers to get hit by Trump's tariff plan. While it was recently announced that the reciprocal tariffs would be paused for most countries for 90 days, in favor of a base 10% tariff on most goods, the automotive tariffs were not included in that pause.

The reason behind GM's looming tariff pain is that while the company produces more than half of the vehicles that it sells in the U.S. domestically, only about a third of its vehicles are produced using American parts. That might not sound like a big deal, but take it from JPMorgan analyst Ryan Brinkman:

We estimate GM imports ~$56 billion of vehicles annually from Mexico and Canada, which after adjusting for content originating in the U.S. may amount to ~$38 billion--subject to a ~$10 billion tariff under a 25% rate .... For parts, we estimate GM's share of the ~$92 billion imported by the industry may be ~$4 billion, implying a total tariff exposure of ~$14 billion before coping mechanisms.

GM's larger reliance on imports and parts created significant downside, causing Brinkman to lower his GM price target by $11, down to $53 per share. GM was trading at roughly $44 Thursday morning.

What it all means

The impact from tariffs shouldn't be underestimated and could become crippling, and it puts GM in a tough position. One option is to pause the share buybacks to conserve cash, or in a show of strength it could press on with its accelerated purchase program. Your guess is as good as mine what GM will do, and management has mentioned the company is exploring several options to mitigate tariffs.

For investors, however, the pause of reciprocal tariffs is an example of how quickly these developments can reverse course. As crippling as these tariffs may be in the near term, it would be wise not to make any knee-jerk reactions, and over the long term GM will almost certainly continue returning significant value to shareholders through share buybacks.

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Detroit automakers can run but they can't hide from the potentially devastating impacts tariffs could have on their business. The stocks have been hammered all year long, some worse than others, and the true impact is yet to be felt.

Amid the slew of analyst downgrades and lowered price targets there's a reality that is setting in for some investors: Tariffs could cause Ford Motor Company (NYSE: F) to alter how it returns value to shareholders. In other words, Ford may be forced to cut its coveted dividend.

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Lucrative dividend

Ford has no doubt faced its share of challenges lately. The company is working to cut costs at the same time it's attempting to improve quality issues that have dinged the company's bottom-line through warranty costs. It has challenges in a tough Chinese market, and it's also burning through billions of dollars churning out each electric vehicle at a loss currently.

Throw in the potential impact of tariffs and it's not farfetched to think that Ford may have to cut its lucrative dividend, which remains one of the largest reasons to own the stock. Ford's current dividend yield sits at a lofty 7.8% due to the stock's sell-off, and trades at a paltry price-to-earnings ratio of 5.8.

"It is time to confront some hard truths, once more: vehicle tariffs have commenced, and parts tariffs are likely to follow within a month," wrote Bernstein analyst Daniel Roeska, according to Barron's. "We extend our company analysis to Ford and find significant downside not priced by the market yet."

He could be exactly right when it comes to the downside not being priced into Ford stock yet. As you can see in the graph below, likely thanks to having more production capacity located in the U.S., Ford's stock has shed less value than its competitors so far in 2025.

TSLA data by YCharts

The good news is that Ford shouldn't have to cut the dividend right away, as the company has ample liquidity to wait and see if the tariff drama ends in the near term, one way or another. In fact, you can see in the graph below that Ford has steadily improved its cash position and can easily cover the dividend.

F Cash and Equivalents (Annual) data by YCharts

How costly could it be?

The pain from the tariffs won't be completely felt through the 25% tariff on imported vehicles, but rather next month when another 25% tariff is expected to be slapped on imported automotive parts. For example, Ford produces about 82% of its U.S. sales domestically, but only about a third of its cars are built using domestic parts.

The cost could end up being significant. J.P. Morgan analyst Ryan Brinkman wrote in a note to investors that the current tariff proposals could cost Ford around $6 billion -- rival General Motors fared worse with his estimated cost reaching around $14 billion.

If there's anything to take away from this assessment, it's just how serious these tariffs could be. Not only could they affect Ford's bottom line, but if the tariff pain is extended long-term it could jeopardize the company's lucrative dividend.

With that said, if the dividend is a core part of why you're considering owning shares of Ford, understand that it will always be a focus for the company. Even if it is temporarily cut to mitigate tariff costs, it will one day reach its full potential again as management is committed to returning value to shareholders in that manner.

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Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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Given how much news is swirling about this month regarding tariffs, you have likely heard about the 25% tariffs that the Trump administration slapped on all imported vehicles that began last week. On top of those steep import taxes, next month is scheduled to bring another 25% tariff on all automotive parts shipped in from outside the U.S. market.

It's a huge move, and potentially a very costly one for the automotive companies and for their customers. It has shaken the industry and sent many automotive stocks spiraling downward. Well, all except for one or two, including the often-overlooked Ferrari (NYSE: RACE).

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How's it looking?

It takes only a glance at year-to-date stock prices to see how devastating the tariff announcements have been.

Data by YCharts.

Investors might have thought Ferrari would be one of the hardest hit since the 25% tariff slapped on its imported ultra-luxury vehicles would be a much bigger chunk than, say, an average mainstream $40,000 vehicle. After all, this is the car company that produces the F80, which retails at a staggering $3.9 million before options!

While that's true, investors also have to consider context. That context is that Ferrari's typical consumer doesn't really have money issues. It's the driving force behind the stock's resiliency during a recession, since those consumers are less affected by such downturns and continue buying Ferraris regardless of the economic outlook.

Also weighing in its favor is that the company focuses on very strict exclusivity, going as far to limit the number of vehicles it sells to keep demand high and prices strong. You can see the pricing strength as recently as the fourth quarter when the number of Ferraris sold increased a modest 2% but its revenue jumped 14%. The average vehicle sold cost more than $500,000.

More good news

Even better, Ferrari's outstanding pricing power filters down to the bottom line as well. Operating profit jumped 26% year over year during the fourth quarter while earnings per share jumped a significant 32%. Ferrari is a cash-printing machine, but it's also incredibly consistent with revenue gains over the years, as you can see below.

Data by YCharts.

Even the slight dip caused by the pandemic didn't last for long. Ferrari historically trades at a premium, and rarely will investors get an opportunity to buy at a discount. But even so, the company launched a $2 billion share-buyback program in 2022, which suggests management believes it may still be undervalued.

To put in perspective how powerful Ferrari's pricing and margins are, simply compare them to mainstream automakers.

Data by YCharts; TTM = trailing 12 months.

To put it bluntly, not only is Ferrari arguably the best automotive stock to own, it's potentially one of the best stocks to own, period. Over the last 10 years, the stock price has zoomed 627% higher and left the S&P 500's 151% gain in the rearview mirror.

So, when it comes to automotive tariffs, don't be surprised if the automaker once again shows its resiliency and pricing power, since it almost certainly can and will pass the cost on to its lucrative target audience. It's just one more reason owning Ferrari is a smart investment, and even a small 6% dip year to date might be an entry point.

Should you invest $1,000 in Ferrari right now?

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Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and Stellantis. The Motley Fool has a disclosure policy.