Global electric vehicle giant Tesla is facing its biggest challenge since its inception. On April 15th, Tesla's stock price plummeted, and its market value almost evaporated overnight, equivalent to an Ideal Automobile. Musk also announced that Tesla would lay off more than 14,000 people. So, what is the relationship with Wall Street capital? Is it suppressing the electric vehicle industry and indirectly suppressing China? Will Tesla's Shanghai factory be affected?

Why Wall Street is short selling

Tesla's stock price has plummeted again, and Musk announced that Tesla will lay off 14,000 people worldwide. Behind this is Wall Street capital's short selling of the electric vehicle industry, and the purpose is obvious.

In fact, not long ago, Tesla received the biggest good news since its establishment, which is that Apple announced it would not build cars. This was originally an epic good news for Tesla, as Tesla lost a heavyweight competitor.

However, the outcome is just the opposite. Tesla's stock price is still falling, and it plummeted by 5.59% on the evening of April 15th, equivalent to 221 billion yuan, which is equivalent to the total market value of our country's Ideal Automobile.

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In fact, since the highest point of Tesla's stock price of $414.497 per share, Tesla's market value has evaporated by 61%, equivalent to more than 4 trillion yuan.

This market value is equivalent to twice the total of well-known Chinese electric vehicle giants such as BYD (about 620 billion), Weilai (about 35 billion), and CATL (about 87 billion).

So, what is the reason for such a large valuation decline?Ever since Tesla became the leader in the American new energy vehicle industry, its leading position has been unquestionable. Musk has benefited from Tesla's soaring stock prices, making him the richest person in the world.

In order to stimulate the healthy competition and development of domestic electric vehicle companies, we have also laid out the world's largest Tesla factory in Shanghai. This has not only created jobs for our country, but also promoted the further development of our country's electric vehicle technology.

Apple, Mercedes-Benz and other companies have announced the abandonment of new energy vehicle projects and returned to the field of fuel vehicles, which makes people question whether the West is still committed to new energy vehicles.

However, whether Europe and America really no longer pay attention to new energy vehicles, and its impact on the automotive industry is still to be observed. But it is clear that the shift in Europe and America's policies towards new energy vehicles will undoubtedly cause a major blow to Tesla.

Wall Street in the United States has implemented short-selling operations on Tesla, leading to Tesla's continuous decline. Short-selling is a unique investment method, with the core idea being that stock prices change while the number of stocks remains stable.

After the start of short-selling, the greater the decline in the stock price of the short-sold company, the more profit the short-seller gains.

Since Tesla's stock price climbed to about $400 per share in 2021, and Musk became the richest person in the world, Wall Street has been closely watching Tesla.

At the beginning of 2022, Wall Street giants such as Muddy Waters, Citron, Chanos, and JP Morgan publicly stated that they were short-selling Tesla.

However, these institutions suffered significant losses in their first short-selling action in 2021, and then suffered a heavy blow in 2022.

It was not until the Federal Reserve started the interest rate hike cycle in 2022 that the U.S. stock market plummeted, and Tesla also suffered a heavy blow. Wall Street institutions were able to turn the tide.Subsequently, Wells Fargo and UBS joined the short-selling camp against Tesla, continuously issuing reports to bearish on Tesla, accusing it of being a "growth enterprise with no growth".

In fact, this is no different from short-selling China and downgrading our sovereign credit rating. Of course, it's not just Tesla; all industries in the global electric vehicle industry chain, including upstream lithium mining, batteries, and even complete vehicles, have been shorted by American capital.

Previously, Apple canceled car manufacturing for a significant reason: it could not reverse the current industry pattern where China controls the global electric vehicle industry chain. Therefore, short-selling Tesla is, to some extent, short-selling China.

This is because more than 60% of Tesla's components come from China, and the super factory in Shanghai, China, employs almost exclusively Chinese workers, with all raw materials and components sourced from China.

Former U.S. President Trump and current President Biden have both threatened to sanction China's electric vehicle industry chain; Biden banned components for charging piles from China, and Trump even threatened to prohibit the import of automotive products from Mexico that originated in China.

We know that due to U.S. trade restrictions against us, many Chinese manufacturing enterprises have relocated to countries like Vietnam and Mexico, where they process and produce goods before exporting them back to the United States.

These are used in American automotive manufacturing, many of which are part of Tesla's industry chain. Musk encouraged Chinese companies to set up factories in Mexico to evade sanctions.

Limit China at the expense of Tesla?

Of course, Tesla's declining stock price is also closely related to its performance in the Chinese market. Under the policy impact in the global market, especially in Europe and America, Tesla is suffering from a severe reduction in market share and limited development space.At the same time, with the rise of companies like BYD, NIO, XPeng, and Li Auto, Tesla's sales in the Chinese market have also plummeted dramatically.

Thus, it is not hard to understand why some American media describe Tesla as the "sacrificial lamb" of the automotive industry transformation, the immense pressure it faces is evident.

As an automaker with a market valuation of over five hundred billion dollars and leading new energy technology, Tesla has been snubbed by European and American countries.

In Tesla's global sales map, China and the United States are its two most valued markets, accounting for nearly seventy percent of its sales.

Speaking of recent years, China's electric vehicle industry has been thriving, especially last year when our country unexpectedly became the world's largest automobile exporter.

Among the many Chinese electric vehicle manufacturers, BYD stands out as the brightest star; their battery technology is unparalleled, their product line is diverse, and their sales naturally continue to rise.

It is particularly worth mentioning that in the last quarter of last year, BYD's sales of pure electric vehicles successfully surpassed Tesla, becoming the world's highest-selling electric vehicle manufacturer.

In the United States, Tesla faces another kind of pressure; to protect traditional car manufacturers and lower the status of the entire electric vehicle industry chain globally, the U.S. government's support for electric vehicles has begun to gradually weaken.

At the end of March, the U.S. government relaxed automobile emission standards and also lowered the development goals for electric vehicles in the coming years. Originally, the U.S. aimed to achieve a target of 67% of new cars being pure electric by 2032, but recently, this figure has been significantly reduced to 35%.

It is quite clear that the U.S. has always emphasized carbon emissions, with Biden sending climate envoy Kerry to negotiate with China on multiple occasions. Now, as a developing country, China has completely controlled carbon emissions.The United States has once again raised its vehicle emission standards, and this double standard profoundly reveals the hypocrisy of the U.S., which even its own citizens are constantly criticizing.

Right after Janet Yellen visited China to accuse it of overcapacity in electric vehicles, American renewable energy expert David Fickling pointed out that Yellen's criticism of China's overcapacity in new energy is contrary to modern economic theory.

In order to maintain American trade protectionism, she disregards her own moral integrity and criticizes China's green energy strategy, which seriously violates the spirit of environmental protection.

Yellen narrows the important industry that will affect the future of global humanity to the success or failure of individual companies, which is too narrow-minded. China's decision to promote clean energy is not an "unfair state intervention," but is based on market demand.

Yellen ignores the basic principle of "comparative advantage," wrongly accusing China's "overcapacity" as being completely contrary to the concept of promoting clean technology in the U.S.

This fully proves that China has taken an absolute advantage in this field, and the U.S. is far behind.

The U.S. government's reduction of electric vehicle targets also means that investment in related industries, such as the construction of charging piles, will be greatly reduced, which will undoubtedly weaken consumers' enthusiasm for purchasing electric vehicles.

For Tesla, China and the U.S. are their two largest markets, and now these two markets are facing huge challenges for different reasons.

The competition in the Chinese market is becoming more intense, while the U.S. has begun to reduce support for electric vehicles, and consumer interest in electric vehicles has also significantly decreased. The U.S. has sacrificed Tesla in order to suppress China.

Regarding the issue of Tesla layoffs, if calculated according to the 10% data inside Tesla, about 2,000 people will be laid off at the Shanghai factory.China is absolutely supportive of new energy, so the probability of layoffs at the Shanghai factory is much lower than that in other countries.

China's new energy is continuously moving towards the world, and Tesla has to face the reality of competitors nibbling away and declining sales for a long time.

The problems faced by Tesla are largely due to China's control over the pricing power of the new energy automotive industry chain, but what I want to say is that energy shortages and rising oil prices are highly probable events.

In the future, as our batteries continue to upgrade and replace, our country's efficiency will become higher and higher. This is actually the fourth industrial revolution. Our innovations are all in the fields of the real economy and manufacturing, which is a huge difference from the company valuations promoted by the United States in the virtual economy and capital markets. Which one can truly represent the future direction of the world is a matter of personal opinion. What we need to do is to develop the economy in a down-to-earth manner and do our own things well, without being disturbed by external noises.