Tesla's management may have manipulated revenue from China to enrich themselves

 Tesla is a great company both in China and free world. It plans to increase investment 1.2billion yuan in China as reported by Reuters in Chinese. (https://www.reuters.com/article/tesla-shanghai-production-line-1126-idCNKBS2IB06L) 

There are 49 subsidiaries in China including Hong Kong as at the end of 2020, according to List of Subsidiaries of the Registrant in the EX-21.1 4 tsla-ex211_15.htm EX-21.1 to 10-K file. It generated 6.66 billion of revenue from China or 21% of gross revenue. The increase in 2020 of revenue from China was 3.87 billion or 123.49% compared to 2.56 billion or 20.24% increase from the United States, according to the 10-K document filed on 8 Feb 2021. On page 93, it could be inferred that vesting of stock option awards on directors relied on revenue and net income (loss) attributable to common stockholders before interest expense, provision (benefit) for income taxes, depreciation and amortization and stock-based compensation reported in the financial statements. EBITDA is revenue minus operating costs. Chief executives’ stock options vesting relied heavily on the growth of revenue in China.

However, be cautious about the numbers reported in the financial statements when calculating p/e ratio to arrive at the intrinsic value. Its p/e ratio was 306.29 at 21 January 2022.The audit papers of PricewaterhouseCoopers Zhong Tian LLP, the component auditor in relation with the Tesla's operation in China haven't been inspected for consecutive three years from 2018 to 2020 by PCAOB, according to the information filed by PricewaterhouseCoopers LLP on PCAOB’s website, the group auditor or major auditor. (https://pcaobus.org/oversight/international/china-related-access-challenges/china-referred-work?searchWithin=tsla). Overstatement of earnings or revenue of China operation could lead to overstatement of consolidated earnings or revenue through the process of consolidating after translating into US dollar from Chinese Yuan. The Chinese Yuan/USD was too expensive some Chinese thought. Chinese censorship system may cover up business scandals which could become a surprise strike on stock market performance someday.

Electronic cars made in China consume energy which could encourage genocide and crime against humanity. 320 million tons of coals were produced in Xinjiang in 2021, mostly converted to electricity or gas, where genocide is undergoing. (http://www.coalchina.org.cn/index.php?m=content&c=index&a=show&catid=10&id=136058)

There’s guanxi culture in China which means that without bribery or corruption business is hard to continue. Corruption in China therefore could only be encouraged also because Chinese accountancy firms are also influenced heavily by government. It could lead to understatement risk of contingent liabilities and provisions regarding environment pollution, forced demolition of private homes and forced labour. Guanxi culture also means that if the political figure the business relies on failed to keep job in political fight, the business was likely to be given a heavy surprise. It means any company with investment in communist China may fit for bottom straddle strategy. 

IP theft risk is also significant in China which could give rise to risk of overstatement of intangibles. 

Tesla’s calculation may possibly be based on population number 1.4 billion of Chinese. There are many reports in Chinese that there are only 800 million Chinese living in China(https://www.rfa.org/mandarin/yataibaodao/junshiwaijiao/lxy-01092018110111.html; https://www.epochtimes.com/gb/21/8/6/n13143176.htm)

 If Tesla couldn't learn lessons of other US companies in China, Tesla could be another victim of Chinese communist theft. Even with the greatest technology could be defeated by technology thief.