All about autos: 3 trades in transports

Tesla shares broke above $250 on Tuesday for the first time this year ahead of the company's annual shareholders meeting.

At the gathering, CEO Elon Musk said it seemed likely that the company would maintain an average annual growth rate of roughly 50 percent for the next several years.

Read MoreA Tesla pullback is coming: Trader

CNBC's "Fast Money" trader Dan Nathan said Tesla's stock has traded off a lot of good news recently and investors who haven't jumped in yet might be late too to the party.

"If you're getting onto this story right now," the risk is to the downside, Nathan said.

Fellow "Fast Money" trader Guy Adami disagreed. "I would say the potential risk is to the upside," he said. Although Tesla shares have climbed significantly since the end of March, they've gone up in a pretty orderly fashion, Adami added. He sees it possibly trading up to the $290s.

General Motors shares inched up on on Tuesday amid reports that Fiat Chrysler had reached out to hedge fund managers with positions in GM about a potential merger.

Read MoreWhy are Americans buying so many cars?

When asked about the rumors on Tuesday, GM CEO Mary Barra said she doesn't think a merger with Fiat would make sense in terms of scale.

Naturally, the GM-Fiat news sparked a debate on how to trade a potential merger between GM and a competitor, which led to a game of "who'd you rather," with the choices being GM and its long-time competitor Ford.

"Just on valuation alone, I think you start dipping your toes into the letter F," Adami said, citing Ford's upbeat auto sales figures in May.

On the other hand, Najarian said he has his money on GM in the long run. "The upside comes from GM," he said.

GM shares tumbled last year, mostly on a slew of auto recalls, but it has since recovered to trade around $35 a share.

"I think this is a stock that could very easily hit $40 again… it trades really inexpensive and could go to the upside, " Najarian said.

Disclosures:

Karen Finerman

Karen is long BABA, BAC, C, FINL, FL, GOOG, GOOGL, JPM, KORS, M, URI, she is short SPY, Her firm is long ANTM, AAPL, BAC, C, DIS, FBT, FINL, FL, GOOG, GOOGL, GPS, IBB, JPM, KORS, M, MYL, SUNE, URI, XBI, KORS calls, URI calls, SPY puts, her firm is short IWM, SPY, MDY, M calls, Karen Finerman is on the board of GrafTech International.

Guy Adami

Guy Adami is long CELG, EXAS, INTC, Guy Adami's wife, Linda Snow, works at Merck.

Pete Najarian

Long AMAT, AAPL, BABA, BAC, BMY, BP, CSX, DISCA, DKS, FOXA, GE, KKR, KO, LLY, MBLY, MRK, PEP, PFE, he is long calls AAL, AAPL, BBY, BMY, C, COP, DAL, EBAY, EEM, EMC, ETFC, F, GE, GS, HPQ, IMAX, LEN, MT, MU, NEE, PFE, SXC, SYY, TEVA, TJX, UAL, UPS, VZ, WFM, WSM, XLF, ZIOP. Today he bought WFM calls.

Dan Nathan

Dan is long SPY June put fly, TWTR, TWTR SEPT call spread, GPRO June put fly, BBRY June calls, SO, DE June put fly, INTC July put, WMT June call fly, LVS July Aug put spread, he is short SO Aug call. Today he bought to open TWTR Sept call spreads and GPRO June Put Fly, today he sold to close LNKD July call fly.