The situation surrounding EVs in the United States may be on the brink of a regime change.
tesla Sales and production numbers reported on Thursday, July 2 were very strong. The company reported producing 451,758 vehicles and delivering 480,126 vehicles. This is 18% higher than the consensus estimate of 406,600 units delivered.
Despite this, the stock price did not perform particularly well. The $1.5 trillion valuation is grim, representing about 15 times sales over the past 12 months.
Meanwhile, much smaller EV competitors Rivian It recently launched R2, a mid-market SUV targeting the most competitive segment currently led by Tesla Model Y. How small is Rivian? As I write this, Tesla has a market cap of $1.48 trillion. Rivian’s market capitalization is $23.5 billion. Tesla sold about 1.64 million cars in 2025, while Rivian sold just 42,247.
Tesla since the beginning of the year
But the problem is that 96.9% of the cars Tesla sold last year were Model 3/Y. Model S, X, and Cybertruck combined account for just 3.1% of the total. Why is this important? Because until now, Rivian has only competed with these expensive cars with the $100,000-plus R1S (about the same price as the Model X) and the R1T, which as a pickup is closest to the Cybertruck in terms of target market. Until now, Rivian only offered two very large and very expensive models. Currently, the company has a vehicle aimed squarely at mid-market SUVs, its largest market segment, which has been dominated by the Tesla Model Y.
holly index
My own grassroots consumer behavior analysis is summarized in what I call the Holly Index. For years, my wife Holly’s purchasing choices have served as a leading indicator of consumers’ discretionary spending habits. For example, Lululemon, Starbucks, Costco, Apple, Nike, and Tesla were among the top companies for a long time, but some of these companies have dropped out of the “Holey Index.” By Christmas 2023, Lulu will be replaced by Vuori (privately held), Nike by ON Holding, and Starbucks by Equator and Blue Bottle. Costco will remain, but since prices have come down since Whole Foods was acquired by Amazon, more purchases are being made from Whole Foods, and Amazon returns may also be dropped there.
Apple is still on the list, but the most notable change so far is that after driving two Teslas in a row, I just booked a Rivian R2 for year-end delivery. I’ve never been into the car market myself, but competing not only with mid-size electric SUVs, but also traditional mid-size ICE SUVs (which I drive) seems appealing and well-positioned.
After Tesla announced better-than-consensus sales and delivery numbers on Thursday, July 2nd, the stock price fell significantly. When a stock sells in response to objectively good news, it shows that the good news is fully priced in. At such high valuations, it’s difficult to identify the next catalyst that could structurally drive the stock higher.
While short-term trends favor Rivian, we must remain vigilant about the underlying reality. Rivian is not yet profitable and is unlikely to reach net income by 2030. The company currently has approximately $4.8 billion in cash on hand, according to its latest quarterly report. But the consensus on the street is that Rivian will burn through about $9 billion before becoming cash flow positive. This suggests that dilutive secondary or bond issuances are inevitable in the medium term. Because of this structural overhang, we want to express a moderately bullish stance through a premium collection rather than chasing the stock after it has risen nearly 45% from its mid-May lows.
Rivian, YTD
To capture this divergence, we introduce two high-probability option structures.
RIVN August 21st 16 Put – Sell until open @ $0.85/contract (5.3% strike yield in less than 2 months, worst-case ownership of stock at $15.15 per share, ~19% discount to Thursday, July 2nd closing price).
TSLA July 31st 420/425 call spread sold at $1.35 per credit until open. This slightly bearish vertical call spread provides a clear risk mechanism to capture a premium when Tesla stock consolidates or declines, maximizing profits if the stock stays below $420 through July expiration.
