Analyst says Tesla best-case scenario could see share price spike 70% to $3,500

Demand in China for the Model 3 sedan looks to be huge.

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Image source: Tesla

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla Inc (NASDAQ: TSLA) is going to benefit so much from pent-up electric vehicle demand in China that one analyst says his best-case scenario for the stock will see it rocket 70% higher to $3,500 per share from its current price of $2,050.

Wedbush analyst Daniel Ives told investors in a note Tesla's recent price cuts coming at a time when demand for its Model 3 was welling up created a "perfect storm of demand" that alone would be worth an additional $400 per share or more being added to the stock price.

As a result, he increased his "bull case target" price for Tesla from $2,500 to $3,500 per share.

Gigafactory 3 is Tesla's advanced, state-of-the-art facility in Shanghai designed to produce both its Model 3 and Model Y electric motors and battery packs, as well as Tesla's Powerwall and Powerpack energy storage products.

The factory is currently dedicated to Model 3 production, but is undergoing a second phase of construction that appears to be nearing completion that will handle production of the Model Y.

According to TheFly.com, Ives wrote the factory's demand appears to be suggesting a 150,000 unit run rate for the Model 3 in its very first year of production. He noted the China component of Tesla's electric vehicle growth story could add $35 in earnings per share by 2025 or 2026, compared to prior estimates of $20 to $25 per share. It's the reason he hiked his best-case scenario price target.

However, it's notable Ives' primary outlook for Tesla maintains a neutral rating on the stock and a $1,900 price target.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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