How to trade the new EV Main Street battle

The EV landscape in the United States may be on the verge of a regime change.

Tesla’s Sales and production figures announced on Thursday, July 2 were quite strong. The company reported that it produced 451,758 vehicles and delivered 480,126 vehicles; this figure was 18% above the consensus estimate of 406,600 deliveries.

Despite this, the stock did not perform very well. $1.5 trillion is a tough valuation; Approximately 15 times after 12 months sales.

Meanwhile, a much smaller EV rival rivya Recently, Tesla launched the mid-range SUV R2, targeting the most competitive segment led by the Model Y. How small is Rivian? As I write this, Tesla’s market cap is $1.48 trillion. Rivian’s market capitalization is $23.5 billion. Tesla sold approximately 1.64 million cars in 2025. Rivian sold only 42,247 units.

But here’s the thing: 96.9% of the cars Tesla sold last year were Model 3/Y. Model S, X, and Cybertruck combined accounted for just 3.1%. Why is this important? Because until now, Rivian was only competing with these expensive vehicles with the $100,000-plus R1S (roughly comparable to the Model X in terms of price) and R1T; As a pickup truck, it was closest to the differently styled Cybertruck in terms of target market. So far, Rivian has only offered two very large and very expensive models. Now they have a vehicle aimed squarely at the largest market segment: midsize SUVs, where electric vehicles are dominated by the Tesla Model Y.

My own analysis of grassroots consumer behavior is summarized in what I call the “Holly Index.” My wife Holly’s purchasing preferences have served as a leading indicator of consumers’ discretionary spending tendencies for years. For example, Lululemon, Starbucks, Costco, Apple, Nike, and Tesla were at the top for a long time, but many of these companies have fallen off the “Holly Index.” By Christmas 2023, Lulu has been replaced by Vuori (which is unlisted), Nike has been replaced by ON Holding, and Starbucks has been replaced by Equator and Blue Bottle. Costco remains present, but more pickups are coming from Whole Foods because its prices dropped after the company was acquired by Amazon, and Amazon returns can be dropped off there.

Apple remains on the list, but this is the most notable change yet: After driving two consecutive Teslas, it booked a Rivian R2 for year-end delivery. I wasn’t in the market for one either, but this one looks attractive and well-positioned to compete not only with midsize electric SUVs but also traditional midsize ICE SUVs (which is what I drive).

The stock fell significantly when Tesla announced sales and delivery numbers that beat consensus on Thursday, July 2. When a stock sells on objectively good news, it indicates that the good news is fully priced in. At these high valuations, it’s difficult to identify the next catalyst that will push stocks structurally higher.

While the short-term trend is in Rivian’s favor, we need to be careful about its fundamental facts. Rivian is not yet profitable and is unlikely to achieve net profit before 2030. The company currently has approximately $4.8 billion in cash on hand, according to its latest quarterly report. However, street expectations suggest that Rivian will burn through around $9 billion before turning cash flow positive. This suggests that a dilutive secondary or debt issuance is inevitable in the medium term. Because of this structural protrusion, we would like to express the following: modestly Bullish stance through premium collection rather than tracking the stock after a nearly 45% rally from mid-May lows.

To capture this difference, we use two high probability option structures:

RIVN Aug 21, 16 Puts – Sell to Open at $0.85/contract (5.3% strike return in less than 2 months, worst case would have the stock at $15.15/share, which is an almost 19% discount to the closing price on Thursday, July 2nd.)

TSLA July 31 420/425 Call Spread, Sell to Open @ $1.35/credit. This modestly bearish vertical call spread provides a defined risk mechanism to earn premiums as Tesla consolidates or declines, maximizing profits if the stock remains below $420 by the end of July.