Tesla (NASDAQ: TSLA) stock has climbed 8% after reporting what can only be described as a terrible first quarter of 2025. The company's sales dropped, and it was profitable only because of regulatory credit sales. Travis Hoium digs into the results in this video.

*Stock prices used were end-of-day prices of April 22, 2025. The video was published on April 23, 2025.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Travis Hoium has positions in Alphabet and Mobileye Global. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool recommends General Motors and Mobileye Global. The Motley Fool has a disclosure policy. Travis Hoium is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

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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There's been no shortage of woes for Tesla (NASDAQ: TSLA) this year.

The company just reported a 13% decline in first-quarter deliveries. The brand is in the midst of an unprecedented crisis due to CEO Elon Musk's political turn, helming the operation known as the Department of Government Efficiency and weighing in on elections across the U.S. and in Europe. And President Donald Trump's tariffs threaten to further weaken the economy, specifically impacting the auto sector.

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Coming into 2025, Tesla was already struggling as deliveries fell in 2024, marking its first annual decline in unit sales.

However, despite those troubles, Tesla stock has been resilient, largely because investors have high hopes for its autonomous vehicle (AV) technology, which Musk said would make Tesla the world's most valuable company. In particular, the Tesla CEO has talked up a robotaxi network from his company, which he believes will be key in achieving that valuation.

The company unveiled its Cybercab robotaxi at a launch last October, but the event underwhelmed Wall Street, and it has not yet performed an autonomous vehicle ride. Tesla plans to begin offering autonomous rides in June in Austin, Texas.

However, the robotaxi market could get crowded quickly as the company seems to have new competition from Amazon (NASDAQ: AMZN).

Image source: Amazon.

Here comes Zoox

Amazon is a huge company, best known for its e-commerce and cloud-computing businesses. However, the company also has a self-driving car business after acquiring Zoox for $1.2 billion. Zoox has quietly prepared to launch an autonomous vehicle ride-sharing service in several cities across the country, and it could do so before Tesla.

Zoox announced recently that it was launching its sixth testing site in the U.S., this time in Los Angeles.

Amazon's ride-sharing service is also aiming to begin serving riders in Las Vegas and San Francisco, though it's unclear when. Zoox is different from most of its autonomous vehicle peers as it has four inward-facing seats, allowing for a more social experience than the typical vehicle and it has double doors that allow for easy entry and exit, making it look more like a shuttle van. The company says it's a robotaxi, not a car.

Can Amazon challenge Tesla in AVs?

At this point, it's speculative to assess Zoox's potential in autonomy, but it's clear that the space is becoming more crowded as Alphabet's Waymo continues to spread to new cities and as other companies work toward autonomous ride-sharing.

Tesla is also facing deep-pocketed rivals in Alphabet and Amazon, both of which generate tens of billions of annual free cash flow, some of which they can throw at the autonomous vehicle market.

Tesla does have a singular advantage with millions of cars on the road, but its full self-driving technology still requires supervision. Launch of the ride-sharing service is expected to include unsupervised full self-driving, available to Tesla owners.

If the technology proves to be capable of navigating the roads safely, it could be the game changer that Musk hopes it will be as the millions of Tesla owners could subscribe to FSD and theoretically lease their own vehicles out for ride-sharing -- provided the software is there to support it.

However, the arrival of well-heeled debutantes like Zoox shows that Tesla may not dominate the robotaxi market the way the bulls expect.

It's also worth remembering the safety risks in AVs. Other companies' autonomous dreams have gone up in smoke, including Uber Technologies and General Motors, which recently pulled all its Cruise vehicles off the road and ended that program.

Better buy: Amazon vs. Tesla

At this point, Tesla seems priced for perfection, and that perfection includes unsupervised FSD and a burgeoning ride-sharing network. Amazon, on the other hand, has a much more diversified revenue base, a cheaper valuation, and better growth prospects, considering the problems with Tesla's EV business.

Zoox's ramp-up toward a mainstream AV company is likely to be significantly slower than Tesla's, but safety is the biggest hurdle in the industry, not speed.

Overall, Amazon looks like the better buy here. While Zoox might not be a major factor in its business right now, it could be down the road, and it gives investors potential exposure to the robotaxi market.

Keep an eye on Zoox over the coming months as 2025 looks set to be a big year for robotaxis.

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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. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Tesla. The Motley Fool has a disclosure policy.