For Elon Musk, the Tesla Gigafactory in Shanghai Lingang is his secret weapon in his battle against short sellers. Under the current circumstances, he once again urgently needs the aid of this old friend.

On the eve of the May Day holiday, Musk landed at Beijing Capital Airport on his private jet, the Gulfstream G550, marking the plane's first landing in China. Following Musk's arrival, the China Association of Automobile Manufacturers released a report indicating that 76 car models meet the four safety requirements for automotive data processing. Tesla's Model 3 and Model Y were among them, making them one of the few foreign models on the list.

With an understanding of China's cultural context, it's not hard to see why this document is far from trivial, thus fueling the rumors about Tesla's FSD (Full Self-Driving) debut in China. Although priced at 64,000 yuan, FSD can be seen as an enhanced service package for Tesla. However, in the Chinese market, it is still at the stage of "being purchasable but not usable."

Musk's trip to Beijing lasted a mere 24 hours, and he didn't even attend the Beijing Auto Show. The market interprets this as him knocking on the door to the world's largest new energy vehicle market for FSD.

However, in contrast to Musk's urgent itinerary, Tesla is facing a series of issues, including slow production capacity growth, environmental activists' protests, and deliveries not meeting expectations. Soon after Musk returned to the US, a new round of Tesla layoffs arrived as expected. The company's Supercharger team was nearly dissolved, and the project manager responsible for the new vehicle model (possibly the Model 2) was dismissed. It's said that Musk formulated the plan on his flight to China, reminding people of his efficiency and many long-unfulfilled promises in other areas.

The substantial progress in upgrading the FSD software from V11 to V12 has made people anticipate the tipping point for autonomous driving technology. However, even Tesla's most loyal supporters are testing the limits of their patience with the company's delayed artificial intelligence visions.

Cathie Wood from Ark Invest, an investor nicknamed "Wood Sister," has been a steadfast supporter of Musk and Tesla. Even as Tesla's delivery figures fell short of expectations, and close allies like Goldman Sachs and J.P. Morgan started to turn away, Wood Sister still strongly supported Tesla. In 2018, when Musk announced his intention to take Tesla private, she immediately published an open letter on Ark Fund's official website advising Musk to maintain the company's public status. She believed Tesla's share value could increase tenfold in the next five years, calling it a "conservative" estimate. Her valuation logic is based on the prediction of transforming Tesla from an automotive manufacturer to a Mobility as a Service (MaaS) company. This service model would revolve around Tesla's autonomous driving algorithms, cultivating a software business that includes FSD subscriptions and Robotaxi services.

After "Queen of Quants" Cathie Wood from the leading investment firm Ark Invest expressed high performance expectations for Tesla, company founder Elon Musk exhibited confidence and subsequently withdrew his proposal to take the company private. Wood predicted that Tesla's business could achieve a gross margin of 80%, an optimistic forecast that seemed to buoy stock market confidence greatly, causing Tesla's stock price to soar. This bolstered Wood's reputation greatly, earning her the moniker "female Buffett" and simultaneously defeating many investors who shorted Tesla.

However, as time passed, the key valuation assumptions set by Wood for Tesla did not materialize as projected. Tesla's latest quarterly results were disappointing, showing a decline in its main automotive business compared to last year, with its Full Self-Driving (FSD) subscription service making up only a small part of the company's total revenue. FSD has continuously presented a "crying wolf" situation in the tech sector, especially with its prolonged inability to break into the Chinese market, which particularly worries Musk. Conservatively estimated, even if only 1% of Chinese car owners subscribed to FSD at a fee of $99 per month, this segment could bring Tesla over $20 million in profit every year.

Although China is the world's largest new energy vehicle market, Tesla faces significant challenges there. Its planned budget-friendly Model 2/Q has yet to come to fruition, and similar products from Chinese domestic car manufacturers have already become popular in the market, causing Tesla's growth momentum to slow. Tesla's delivery volume decreased, and its profit margin significantly fell to 5.5%, lower than the automotive industry average of 8.9% in last year's third quarter.

In the face of waning capital market confidence in Tesla, the successful deployment of FSD is particularly crucial. However, while looking to the future, we must confront a reality: Tesla has gradually disappeared from major auto shows in recent years. The underlying reason is that Tesla has no new models to exhibit. In contrast, in China, a new car model debuts almost every two days. Musk's ongoing radical aspirations, contrasted with Tesla's current performance, represent a core contradiction facing the company.

The production issues with the Tesla Cybertruck highlight this contradiction; since its debut in 2019, the vehicle only began official sales at the end of last year, and production has not noticeably increased. Another example is the production challenges related to the 4680 battery; although this battery, with a diameter of 46mm and a height of 80mm, theoretically has an energy density five times that of the commonly used 2170 model, efficiency gains have not met expectations due to the radical overhaul of production methods.

Elon Musk, with his bold ideas and innovative technological strategies, has redefined the design of electric vehicle batteries. He proposed a concept that moves away from traditional battery tab designs, instead having the entire bottom and casing of the battery serve as the tabs. Although termed "tabless," the lid itself is indeed part of the battery tab.

This earth-shattering change has inevitably brought about massive adjustments to the production structure and processes, leading to the redesign of production equipment and lines, which imposes additional cost pressures on the company. This reform is akin to the programming work required to reduce the computation time needed by traditional accountants from half a day to one minute. Although this innovation initially requires a significant amount of time to develop, the long-term time and cost savings are evident once it is completed.

However, the challenges facing Musk are not trivial. Tesla's 4680 battery production capacity is limited, and according to data from March 2023, the annual capacity is only enough to support the production of 60,000 Cybertrucks, far from meeting the demand of the existing 2 million orders. Musk admitted in last year's conference call that it would take another year to a year and a half for the Cybertruck to start generating positive cash flow.

Not only is the production progress of the Cybertruck slow, but Tesla's global Gigafactory production capacity growth has also not reached expectations. So far, only the Shanghai Gigafactory in China has met its production targets. This begs the question of why an efficient production model seems to be only achievable in China.

Under various difficulties, Musk's response strategies include the introduction of a series of exciting future projects, such as the Tesla Bot showcased on stage, which seems forward-looking but also implies trouble; the Robotaxi announced through Twitter; and the Supercharger stations. These grand promises are eventually questioned by the market, with CNBC even commenting that Musk always makes some unrealistic promises.

Musk realizes that to compete with rapidly emerging electric vehicle competitors, Tesla must shift its business focus from traditional car manufacturing to artificial intelligence technology, and build the company into one with core competencies in AI. Musk stated bluntly in the quarterly earnings call that viewing Tesla as a mere car company is an incomplete understanding of Tesla, and for those investors who do not trust that Tesla can solve the autonomous driving problem, they need not invest in Tesla.

The investment circle has already started to see Tesla as an artificial intelligence company, but the company still has many promises to fulfill. If they cannot be met on schedule, the high valuation the company has reached will be difficult to maintain. In reality, Tesla is under the pressure of the capital market's long wait, and its Full Self-Driving technology (FSD) seems to be the key to solving the problem.

Valuation expert Aswath Damodaran warned investors in 2016 that choosing to invest in Tesla is equivalent to investing in Musk himself, depending on whether they believe Musk has the foresight and genius vision. If investors think Musk is a modern PT Barnum—a charlatan exploiting the public's curiosity and pursuit of novelty to strike it rich—then they should withdraw their investments quickly.

In the analysis and prediction of Tesla's stock value and prospects, two completely different voices continue to collide. Some analysts, like Damodaran, are bearish on Tesla and believe that it requires a significant cash investment to maintain stable operations, viewing Tesla as a luxury car manufacturer. Since Tesla's IPO, a core controversy has been whether it is a technology company or a car manufacturer. Traditionally, the valuation benchmarks for tech stocks differ from those of auto stocks, and Tesla seems to have broken this boundary.

Bears like Citron Research's founder Andrew Left question whether equipping technology products alone can transform a car manufacturer into a tech company. On the other hand, the bullish ARK analyst Tasha Keeny believes Tesla will soon achieve full self-driving and build its autonomous ride-hailing network. Despite the bears' continued puzzlement at Tesla's soaring stock prices, the company has proven its value through the rise in its stock price, forcing many well-known investment institutions to change their stance.

However, entering 2020, Tesla's trajectory seemed to change, beginning to show more characteristics of a traditional automobile company. Tesla's price-to-sales ratio (market value divided by revenue) fell from 24.23 at the end of 2020 to 8.95, even reaching 2.65 during the worst period. Even for Elon Musk, who has created many miracles, this is a heavy pressure.

Against this backdrop, Full Self-Driving (FSD) has become the key to Tesla's progress, and the Chinese market is considered crucial for achieving this goal. Bank of America, based on Tesla's sales forecasts in China, estimates that by 2030, FSD subscriptions in the Chinese market could bring Tesla up to $2.3 billion in revenue.

Even faced with analysts' strong disappointment over the first-quarter financial report, ARK Investment's manager Catherine Wood (also known as "Cathie Wood") did not choose to retreat. Since the beginning of the year, the ARK fund has gradually repurchased the Tesla shares it sold last year, making Tesla the second-largest holding in the ARK portfolio once again. For Musk, the Tesla Gigafactory located in Lingang has become an important support against short attacks, and now, he may once again need the assistance of this "old friend."