What gets you into trouble is not the unknown, but what you are sure is not what you think.

At 4 p.m. eastern time on January 13, 2020, the share price of Tesla, Inc. (TSLA.NASDAQ) reached 524.86 US dollars per share, up 9.77 per cent on the day.

In after-hours trading, Tesla, Inc. 's offer reached US $528.1 per share, which continued to rise slightly by US $3.24, or 0.62%. As a result, it is basically certain that Tesla, Inc. has stood firmly at the US $500 mark, with a market capitalization of US $94.603 billion, which is close at hand to break through US $100 billion.

01

What is the equivalent of a market capitalization of hundreds of billions?

General Motors Co has a market capitalization of $50 billion in the United States, Ford Motor has a market capitalization of $36.6 billion, FCA (Fiat Chrysler) has a market capitalization of $28.1 billion, and Toyota has a market capitalization of $196 billion in the United States.

In other words, if Tesla, Inc. rises a little more, it will be equivalent to two General Motors Co, or the equivalent of GM plus Ford plus FCA. In other words, Tesla, Inc. has created half of Toyota's market capitalization with the sales of Toyota Motor Corp 1amp 34, and Tesla, Inc. has not yet started to make money.

Judging from the stock price trend, Tesla, Inc. 's share price had just returned to $400 at the close of trading on December 31. In other words, Tesla, Inc. rose 25% after 13 days.

The time scale stretched a little longer-- in fact, less than a month-- Tesla, Inc. hit $400 on December 19th last year. If you look further-- probably more than two months ago on October 24-- Tesla, Inc. opened high with a jump of 17.67%, approaching $300 until the next day he reached the $300 mark with a 9.49% increase.

In other words, in 80 days, Tesla, Inc. shares have passed the three hurdles of $300,400,500, up more than 106 per cent.

Based on a 52-week low of $176.99, the annual return was 196.6 per cent. For investors, this is an extremely "beautiful" return on investment, enough to make people crazy.

02

What is bubble and what is excess?

"it doesn't matter whether there are bubbles or not, what matters is whether bubbles can be constantly digested and absorbed. Of course, bubbles are not bubbles if they can be constantly absorbed and digested. Some people say that only when it is broken is called a bubble, and if it is not burst, it is not a bubble. That is what it means. The explanation given by economist Zhang Jun in his article "crisis Reform and China's long-term growth" is appropriate.

If I can, I will choose to short Tesla, Inc., the current Tesla, Inc. stock price has obviously become a "bubble".

So, back to the beginning of this boom, on October 24th, 2019, what is supporting Tesla, Inc. 's high jump?

You remember correctly, Tesla, Inc. Model 3 appeared in the 325th batch of Road Motor vehicle Manufacturing Enterprises and products Bulletin of the Ministry of Industry and Information Technology on October 23, 2019, which means that Tesla, Inc. 's Chinese factory has obtained the qualification for the production of electric vehicles.

Soon, Tesla, Inc. announced the completion of the Chinese factory, which will begin delivery by the end of 2019.

So what happened on December 31, 2019? Tesla, Inc. delivered the first batch of Chinese-made Model 3 to 15 employees on December 30, 2019. And it is reported that Tesla, Inc. 's first batch of mass delivery will be on January 7, 2020, when Musk will also come to China to announce the follow-up plan.

So why did Tesla, Inc. soar on January 13 this year? It is obviously because of the rumor that the subsidies for new energy vehicles will not fall further on July 1, 2020, which was revealed by the China Electric vehicle Association.

It is certain that the doubling of Tesla, Inc. 's share price this time depends on the "China concept".

China's vast new energy market has brought enough room for imagination for Tesla, Inc.. Investors believe that Tesla, Inc. can replicate a North American sales trend in the Chinese market, so Tesla, Inc. 's share price is worth doubling.

The reason for the high expectations of the Chinese market is that Tesla, Inc. has entered a stable period in the North American market.

According to official figures, Tesla, Inc. sold 112000 Q4 vehicles in 2019 and is expected to sell 367500 vehicles for the whole year. Among them, sales in China are about 36000 vehicles, while sales in Europe are expected to exceed 22000.

In other words, Tesla, Inc. reached 300000 vehicles in the North American market in 2019, an increase of about 100000 compared to 2018, which has almost drained the North American market-the Model 3 was once the top-selling car in California and is expected to account for more than 20% of Tesla, Inc. 's total in 2019.

Although Tesla, Inc. will start the sale of Model Y in 2020, Ford, GM and other auto companies will also invest in corresponding products. More importantly, Tesla, Inc. has no subsidies, and traditional car companies have put in pure electric cars with similar performance, which makes Tesla, Inc. no longer have an overwhelming advantage.

So, what kind of performance does Tesla, Inc. have in the Chinese market to prop up its share price?

To put it simply, Tesla, Inc. 's sales in China are equivalent to those in the United States-at least 150000 to 200000 vehicles.

So, can the Chinese market produce so many Tesla, Inc. and then sell so many Tesla, Inc.?

According to the calculation of the weekly production of 1000 vehicles proposed by Tesla, Inc. 's Chinese factory, the annual production capacity is only 50, 000 to 60, 000 vehicles, which is a far cry from the scale of 150000 vehicles.

According to third-party estimates, the production cost of Model 3 in China is 20 per cent lower than in North America. However, even if the profit margin of the Chinese market is 2-3 times higher than that of the North American market, there is still a big gap between the 300000 vehicles of the Chinese factory and that of the North American factory.

Some people may think that as long as Tesla, Inc. raises the weekly production capacity to 3000 vehicles, the target can be achieved, and it is not difficult for Tesla, Inc. to increase production capacity.

However, the biggest problem for Tesla, Inc. to increase production capacity is that Tesla, Inc., which is characterized by direct sales, actually has no buffer zone for production capacity. Once production capacity exceeds sales volume, Tesla, Inc. will soon form a "sales blockage" in the Chinese market.

In fact, Tesla, Inc. has encountered the problem of "sales congestion" in the Chinese market, while Tesla, Inc. 's approach is to boost sales with substantial discounts.

Prior to this, Tesla, Inc. has changed the sales price several times-although Tesla, Inc. 's Chinese explanation is "in line with Musk's' first principle'"-but it has had a great psychological impact on Chinese consumers. The emergence of the so-called "Tesla, Inc. leek" and "equal party".

Therefore, it is not difficult for Tesla, Inc. to increase production capacity from 1000 vehicles per week to 3000 vehicles per week, but the direct sales model requires Tesla, Inc. to schedule production very carefully, rather than a single-dimensional fixed production. At the same time, given the production support for Model Y, the capacity of the entire Tesla, Inc. plant in China may not expand significantly in 2020.

03

With the full delivery of the domestic Model 3, Tesla, Inc. 's biggest problem is that the consumption logic of the Chinese market is different from that of the North American market, that is to say, it is obviously not as easy to sell Model 3 in the Chinese market as it is in the North American market.

In the North American market, the average price of a car is about $32000, so the main models are pickups and mid-to-high-end models. The price of Tesla, Inc. Model 3 is exactly at this average level.

The average selling price of a car in the Chinese market is about 147000 yuan, while the average selling price of a Chinese brand with a 40 per cent market share is only 89000 yuan.

Therefore, the domestic Model 3 launched by Tesla, Inc. in the Chinese market is a real luxury brand in China, and its competitors are not only the three major pickup trucks or high-end cars of mainstream brands in the North American market, but also luxury brands including BBA, that is, the BMW 3-Series, Mercedes-Benz C-Class and Audi A4L.

Tesla, Inc. is a leading BBA in the American market, mainly due to the intelligent and digital experience established a few years ago, as well as the scarcity experience of early electric vehicles. Consumers in developed markets do not feel new to BBA, but they do feel fresh to Tesla, Inc..

But in China, where a large number of Chinese consumers have not yet experienced luxury brands, Tesla, Inc. actually exists in the same way as BBA, with no additional advantages.

In fact, the product perception conveyed by Tesla, Inc. Model 3 in the Chinese market does not bring the "luxury" that consumers expect, but mainly focuses on electrification, OTA and autopilot.

One noteworthy phenomenon is that these nouns represent the unique concept of smart cars in overseas markets, but they are nothing new to Chinese consumers. This has something to do with the many new car-building forces gathered in the Chinese market. Tesla, Inc., who has no competitors in overseas markets, has no fewer than 10 competitors and imitators in China, which also greatly weakens Tesla, Inc. 's uniqueness in the Chinese market.

As for the Model 3 standard life upgrade version currently launched by Tesla, Inc. in the Chinese market, its product strength is insufficient and its product reputation has declined in the 300000 yuan market, which is also the reason why Tesla, Inc. can quickly expand in the Chinese market.

The content has quickly appeared on social media, and the controversy is expected to have an impact on Tesla, Inc. 's delivery in the Chinese market in the first quarter.

04

However, many investors have completely ignored these shortcomings of Tesla, Inc. in the Chinese market, and only focused on the information that Tesla, Inc. put into production in the Chinese market and entered China's new energy market, and gave Tesla, Inc. 's market capitalization expectation of nearly 100 billion yuan.

Weibo Corp's famous investor Dan Bin wrote when Tesla, Inc. 's share price exceeded $500,000: "Tesla, Inc. is up 9.77%. Last night, I told my friends that Tesla, Inc. has yet to be verified to become the Apple Inc of the automobile industry, but once it does, it has greater potential than Apple Inc. First of all, it continues to upgrade paid content services, just like Apple Inc's APP. There is also a rapid expansion of Tesla, Inc. charging piles and charging stations connected into a network, which can make it a service format like a gas station, and it is world-class, and it is environmentally friendly in most countries and regions, and can be recharged by solar energy. "

Obviously, the logic of their investment in Tesla, Inc. is to replicate an Apple Inc company, but Apple Inc's extensiveness and foundation are not available to Tesla, Inc..

Unfortunately, short sellers are always lonely, and shorting is always the most dangerous business. Tesla, Inc. 's stock price has no pressure line now, and he may go a little further after breaking through 500USD, but the logic of the industry will not change because of the rise of the stock price. Let's end with the words of Mark Twain from the Big short movie:

"what gets you into trouble is not the unknown, but what you are sure is not what you think. "