Tesla has 21% upside potential after stock-split takes effect as China production volume ramps up, Wedbush says

"Demand is not the problem for Tesla, but supply has been and is now clearly on an upward trajectory," Wedbush analyst Dan Ives said.

• Tesla could surge 21% as it benefits from increased volume production at its China factory, Wedbush analyst Dan Ives said.
• Ives set a new $360 price target to reflect the company's 3-for-1 stock split that went into effect today.
• "Demand is not the problem for Tesla, but supply has been and is now clearly on an upward trajectory," Ives said.

Tesla stock has room to run after its second stock split in two years, according to a Thursday note from Wedbush analyst Dan Ives.

Ives set a new $360 price target for Tesla to reflect its 3-for-1 stock split that went into effect today, representing potential upside of 21% from Wednesday's close. Tesla initiated a 5-for-1 stock split in August 2020.

Ives' continued confidence on Tesla stems from the company's ability to ramp up production at its Shanghai factory after COVID-19 lockdowns led to a disastrous second-quarter with deep production cuts. 

But now momentum is building at Tesla's China factory and it should lead to big volume gains heading into year-end, according to the note.

"We are now seeing unprecedented Model Y production in China after factory upgrades with Musk & Co. on a pace to produce over 1 million vehicles annually out of this key product artery," Ives said.

That's a big deal considering Tesla produced just under 1 million vehicles in 2021 from all of its factories.

"Demand is not the problem for Tesla, but supply has been and is now clearly on an upward trajectory with China on its next level of Model Y production while Berlin and Austin ramp its production lines into year-end," Ives said.

Ultimately, Ives expects Tesla to deliver 2 million vehicles in 2023, and its production capacity wil serve as a significant advantage for the company as EV competition heats up from automakers around the globe. 

"Green tidal wave set to play out with Tesla front and center. While the shaky macro will clearly trim some demand for Tesla (as well as the industry) we believe demand continues to hold up firm for the EV stalwart across the US, Europe, and China," Ives concluded.

But Ives may not be bullish enough on Tesla, according to a recent interview with Ron Baron. The billionaire investor told CNBC on Thursday that Tesla stock could quintuple in price over the next decade.