Tesla is going to have to hit the accelerator pedal now that Rivian is riding its bumper.

On Tuesday, Rivian announced that it’s officially starting to deliver its new R2 mid-size SUVs to customers. The move could push the EV maker from the premium end of the market into a more mainstream one that can compete with Elon Musk’s shop and traditional auto brands, thanks to its price. The model now available costs $57,990, but the company is rolling out a slew of others, including a version that will arrive in the summer of 2027 for just below $45,000.

“Its goal is for it to be a high-volume product,” Rivian CEO RJ Scaringe recently told CNBC. “Certainly, we’re going to draw on some Tesla customers, but the market of non-Tesla customers is many, many times larger.”

Speed Bumps Ahead

R2 hitting the market marks a significant milestone for Rivian, one that could determine whether it becomes a household name. Not only does it directly compete with Tesla’s cash cow, the mid-size SUV Model Y that starts at around $39,990, but it also comes at a time when tax credit incentives have expired. Shoppers may steer towards lower-priced models now that they have to pay full sticker price.

But the new offerings could also backfire for Rivian if it can’t keep margins at such a low price point. The company is hoping the R2 will make it profitable after losing $3.6 billion last year and delivering just 42,247 vehicles, down 18% from 2024:

• Scaringe told CNBC the company expects to hit profitability — a goal it previously said it would reach by 2027 before quietly walking that promise back earlier this year — once its Georgia plant is up and running. That plant is expected to start production in late 2028.
• During its most recent earnings call, the company said it was able to cut build material costs of its R1 SUV in half for the R2. Scaringe said every R2 model will be cash-flow positive for the carmaker.

For Sale: Rivian also needs to contend with a surging used EV market. Sales of used EVs increased 17% in January through April while those of new EVs dropped 27% as drivers look to save on gas without shelling out tens of thousands of dollars more for a new car, Bloomberg reported. While that suggests a strong interest in vehicles not fueled by gas, it also means there’s even more competition for the R2.

Marvell Technology’s timing has been not so marvelous.

Shares of the semiconductor company jumped more than 9% on Monday during its first session trading on the S&P 500. The exuberance is typical of the so-called “S&P Bump.” While the sugar high historically wears off over time, Marvell’s bump smoothed out atypically fast; shares of the company plummeted nearly 8% on Tuesday as part of an ongoing chip sector rethink. But it’s unclear whether the sector is entering correction territory.

Whiplash

There’s been a bit of a vibe shift since Nvidia CEO Jensen Huang tabbed Marvell (current market cap $229 billion) as “next trillion-dollar company” just a week ago. An after-the-bell earnings call from Broadcom last week that showed its outlook for AI-related sales was merely really excellent, rather than the perfect that Wall Street had priced in, triggering a sector-wide selloff. The Nasdaq 100 fell about 5%, while the S&P fell 2.6% on Friday, bringing to an end a nine-week winning streak for the index.

Monday delivered a rebound, only to dip again on Tuesday as the chips sector rebound ran out of steam. BNP Paribas analysts warned clients that the forthcoming massive SpaceX IPO may be leading retail investors to sell semiconductor stocks to buy into Elon’s tech conglomerate, and now a schism is forming on Wall Street over what to do next:

• On the more pessimistic side, Bank of America’s top US equities analyst on Friday published a note warning there are “too many red flags,” including the particularly high expectations for future earnings growth, and said it was “time to take profits.”
• On the more optimistic side, JPMorgan Asset Management portfolio manager Jack Caffrey said on Bloomberg’s Surveillance show that he expects stocks to continue to power through the volatility.

Narrowing the Field: “A lot of it’s just simply positioning. For the first two months of the year, about two-thirds of the market was outperformed in the S&P,” Northwestern Mutual portfolio Matthew Stuckey told The Daily Upside. “From the end of February up until Broadcom reported earnings, just a little over 20% of companies were outperforming. It got really narrow as rates rose.”

Since the start of the second Trump administration, the temperature of US-China relations has fluctuated more than the temperatures in the Gobi Desert. This week, things are frosty enough to keep a bowl of Baobing from melting.

The Pentagon accused many of China’s top technology companies of assisting their country’s military, essentially singling them out as a national security threat. The implications will become more complicated at the end of this month, and even more so in a year’s time.

New Rules

At the core of the issue is the Department of Defense’s Chinese Military Companies List. Set up in 2021 with the blessing of Congress, it identifies companies officials consider linked to Chinese military or security forces. The list grew this week with the Pentagon adding firms that are considered to offer industrial or technological benefits to the military.

Headlining the list of companies that were added are e-commerce giant Alibaba, search giant Baidu, and BYD, which leapfrogged Tesla to become the world’s largest electric vehicle manufacturer last year. All three insist their inclusion is baseless and deny being part of a strategy of military-civil fusion. Other newly listed firms are EV maker Nio, battery manufacturers CALB and EVE Energy, sensor manufacturer Robosense, and Unitree, another Tesla competitor that led Elon Musk’s in humanoid robot shipments last year. There are no immediate repercussions for being on the list, but it risks reputational harm and the Pentagon has increasingly used the so-called 1260H designation to restrict companies from contracting with the US military or getting funding for research. Things will also soon change:

• Beginning June 30, the DoD will be officially barred from contracting directly with companies on the list. Many of the companies, unsurprisingly, have a major role in China’s AI economy, a sector where the US is focused on maintaining technological and military advantages.
• A year later, on June 30, 2027, the DoD will not be allowed to procure the products or services of companies on the list through third parties. That means US firms that have ties with companies on the list could risk their own federal contracts.

A Real Deal: Less than two weeks ago, US chipmaker Nvidia announced a partnership with Unitree, which is planning to IPO in Shanghai, to build humanoid robots to assist academic researchers. That’s an example of the kind of partnership that may fall under scrutiny, given Nvidia works with the Pentagon. Investor sentiment, however, is muted for now: Hong Kong-listed shares of Alibaba and BYD fell 1.4% Wednesday, while Baidu was flat. Market reaction may be limited for now because the ups and downs of US-China economic relations have generally eased after tense periods in the last year. After all, we went from each side threatening Shanghai Tower-sized tariffs on each other last summer to President Donald Trump recently praising his Chinese counterpart and Xi Jinping gifting him rose seeds for the White House garden.