Tesla can surge another 71% from current levels as it unlocks more growth potential in China, one analyst.. - Business Insider

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• Tesla's meteoric rise is set to continue as it capitalizes on robust growth from China, according to Wedbush.
• In a note published on Sunday, Wedbush said that in a bull case scenario, Tesla could jump another 71% from current levels to $3,500.
• Pent-up demand for its cars in China, combined with recent price cuts, have created "a perfect storm of demand" for Tesla to take advantage of, according to Wedbush.
• Visit Business Insider's homepage for more stories.

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Tesla's 390% year-to-date rally has shown no signs of slowing down, and according to Wedbush: get used to it.

In a note published on Sunday, Wedbush said that in a bull-case scenario, Tesla could jump another 71% from current levels to $3,500. Wedbush's prior bull-case target was $2,500.

The catalyst that would spur the continued rally in shares of Tesla to $3,500, according to Wedbush, is strong growth from China. 

Pent-up demand for the Model 3 in China, combined with recent price cuts, have created "a perfect storm of demand" for Tesla to capitalize on, Wedbush said.

In the first year after its gigafactory 3 in Shanghai went live, Tesla looks poised to deliver 150,000 Model 3 units. And according to Wedbush, the Model 3 sold in China will have higher margins than Model 3's sold in the US and Europe, which could "markedly increase the profitability profile" for Tesla going forward.

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By 2022, China could make up 40% of Tesla's overall sales if the company's able to keep up with demand, Wedbush noted.

Ultimately, according to Wedbush, Tesla is "back on track" to deliver 500,000 cars this year despite the COVID-19 pandemic, and could ultimately deliver 1 million units per year by 2023.

Besides strong demand from China, Tesla's upcoming batter-day event on September 22 could deliver a surprise to investors, Wedbush explained.

New innovations and "game changing" battery developments means Tesla may be closer to announcing the "million mile battery," a battery that can potentially last for decades and withstand all types of weather and terrain, Wedbush said.

Wedbush remains neutral rated on Tesla and has a 12-month price target of $1,900, representing downside potential of 7%.

Shares of Tesla jumped 4% in Monday morning trades, ahead of the company's planned stock split on August 31.

Last week, Tesla surpassed Walmart in market value. The company is now the ninth-highest valued US stock.

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