Tesla's $2 Trillion Market Value Wiped Out by Wall Street Short Sellers

Tesla, which once bloodied Wall Street, has recently been crushed by the big short sellers.

Since the beginning of this year, Tesla has been plagued with misfortunes, not only with poor car sales but also with a continuous stream of negative news. In just a few months, its market value has plummeted by 40%, equivalent to 2 trillion yuan vanishing into thin air.

Over the past decade or so, including Michael Burry, the prototype of the movie "The Big Short," well-known short-selling institutions like Citron Research and Muddy Waters, and others, have all invested vast amounts of money to short Tesla.

However, Tesla seemed to have divine assistance, not only did it not fall, but it also crushed these big Wall Street short sellers, bloodily cleansing Wall Street.

Now that Tesla's stock price has plummeted, these big Wall Street short sellers must be waking up from their dreams with laughter.

A market value of 2 trillion yuan has evaporated, what exactly happened to Tesla? Why do some say that Wall Street's frantic short selling of Tesla is indirectly short selling China? Will our new energy vehicle industry also suffer as a result?

Advertisement

A market value of 2 trillion yuan has plummeted!

Behind Tesla's stock price crash is the fact that sales have significantly missed expectations, and the future outlook has become unclear.

In the first quarter of this year, Tesla delivered a total of 386,810 vehicles, a decrease of 20.1% from the previous quarter and a decrease of 8.5% from last year, setting the lowest delivery volume since 2022.

The most important point is that in the first quarter of this year, Tesla's production exceeded 430,000 vehicles, far greater than the delivery volume of 380,000.What does this mean?

It indicates that the reason for Tesla's declining sales is not a lack of production capacity, but a genuine difficulty in selling the cars. People are not as willing to buy Teslas as they used to be.

It's important to note that until 2022, Tesla was the undisputed king in the global electric vehicle industry, with sales increasing year after year and net profits that left competitors far behind.

But now, this once unrivaled king has seen a decline in its delivery volume.

With poor car sales, Musk naturally had to take action, and it was quite straightforward and aggressive—mass layoffs.

Not long ago, Musk sent an email to all Tesla employees announcing a global layoff of more than 10%.

Although Musk did not specify the exact number of layoffs, based on a total of 140,000 employees, it would be 14,000 people.

Such a large scale of layoffs, even for Tesla, which has long taken layoffs for granted, is the first time in history.

On one side, the market value plummets by 2 trillion, and on the other side, there is a massive layoff of 10%. What's going on with Tesla?

What's happening with Tesla?The reasons for Tesla's performance difficulties may be due to a combination of various factors.

Firstly, there has been a significant decline in product competitiveness, with the dividends of being a pioneer gradually diminishing.

In the early years, Tesla stood out in the market with advantages such as one-piece casting technology, direct sales model, three-electric technology, and intelligent driving, making it a top-tier player.

However, over the years, Tesla's product update speed has been lackluster, with its main models reaching the end of their life cycle, and the technologies it once prided itself on have long been caught up with or even surpassed by its peers.

Secondly, compared to Tesla's stagnation, the progress of domestic new energy vehicle brands has been too fast.

In the past, domestic car brands mainly focused on mid-to-low-end product lines, which had some overlap with Tesla's market but not much, and did not pose a threat to Tesla's position.

But now, brands like NIO, XPeng, Li Auto, Huawei's AITO, and Xiaomi's SU7 all have product positioning that overlaps with Tesla's main models, directly launching an assault on the opponent's stronghold.

Surrounded by competitors, it would be abnormal for Tesla's sales not to decline, and the pressure it faces can be imagined.

More importantly, for now, it seems that the replacement of Tesla's products is still far away, and the low-end product line has been difficult to deliver. Even if it is really launched, it is uncertain how much of a splash it will make.

With poor sales performance and an unclear future, it is not surprising that Tesla is shorted by Wall Street capital.Is Wall Street's Shorting of Tesla a Disguised Shorting of China?

What deserves the most attention is that, just as Tesla is being heavily shorted by Wall Street capital, some have put forward another viewpoint: Tesla's encounter with a shorting crisis is likely a disguised shorting of China, which could impact China's new energy vehicle market.

Why do we say this?

Firstly, in the current globalized economy, if Tesla's sales decline, Chinese supply chain companies are also inevitably affected.

For example, the battery, which is the most important component of new energy vehicles, last year Tesla sold 1.8 million electric vehicles, the vast majority of which used batteries from Chinese companies such as Contemporary Amperex Technology Co. Limited (CATL).

Now that Tesla's sales are decreasing, the market demand for these suppliers is also likely to decrease, which could lead to overcapacity issues.

Secondly, if Tesla were to stage a "great retreat," it would undoubtedly be detrimental to the rapid development of China's new energy vehicle industry.

Due to some well-known reasons, some multinational companies have already begun to migrate their supply chains, such as Apple and Foxconn, and some foreign companies have even chosen to directly withdraw from the Chinese market.

Although Tesla has long been deeply integrated with China's new energy vehicle industry chain, we cannot rule out the possibility of it reducing the risks associated with the Chinese supply chain.

In fact, Musk has long planned to invest between $2 billion and $3 billion to build a Gigafactory in India, but due to the overly excellent business environment at the home of the "three brothers," it has not yet been realized.In addition, global new energy vehicle companies can be seen as a combination of Tesla and Chinese new energy vehicle companies. Tesla, as the industry leader, if it fails, does it mean that the entire industry is doomed?

Indeed, from the industry's perspective, the growth rate has slowed down, which has also sounded the alarm for Chinese car companies. They should not blindly engage in price wars to compete for the existing market. Instead, they need to enhance product strength and vigorously expand into international markets to raise the industry's ceiling, so that everyone can get a larger share of the cake.

In conclusion:

Although Tesla is currently facing internal and external difficulties, it is not entirely hopeless.

After all, it is the pioneer of intelligent driving technology, and Tesla's technological accumulation in intelligent driving is likely to continue to bear fruit in the future.

Of course, no matter what, developing our own new energy vehicle industry is the right path. Only by being strong can we fearlessly face any challenges.