Short levels have been that high for much of the existence of TSLA. Noone was expecting the price to go down with this announcement specifically.
What you are describing is a short squeeze, and it's still unclear if that is indeed what we are seeing. Many shorts have been unwilling to cover, even when having to pay up to 85% lending rates for stock. A proper short squeeze would not only spike the price, it will make it explode; Volkswagen became the most valuable company in the world at a share price of 1k$ through a short squeeze (even if only for a short time).
Remember also that a short squeeze depends on long investors not taking profit. It only worked in VW because the majority of shares were held by institutions unwilling to reduce their stake and of course Porsche, who manufactured the squeeze.
What you are describing is a short squeeze, and it's still unclear if that is indeed what we are seeing. Many shorts have been unwilling to cover, even when having to pay up to 85% lending rates for stock. A proper short squeeze would not only spike the price, it will make it explode; Volkswagen became the most valuable company in the world at a share price of 1k$ through a short squeeze (even if only for a short time).
Remember also that a short squeeze depends on long investors not taking profit. It only worked in VW because the majority of shares were held by institutions unwilling to reduce their stake and of course Porsche, who manufactured the squeeze.