Chinese vehicle registration data shows big Tesla potential, Piper says as it hikes target by 30%

Tesla Inc CEO Elon Musk dances onstage during a delivery event for Tesla China-made Model 3 cars in Shanghai, China January 7, 2020.
Aly Song | Reuters

The market is underestimating Tesla's growth potential in China even after the recent swift rally, Piper Sandler said.

The research firm hiked its price target on the electric carmaker to $553 from $423, a 30% increase that would translate into a 15% gain from here. Piper's new forecast is based on its analysis of China's vehicle registration data, which showed big upside in the emerging market.

"If Tesla's Model 3 market share in the United States can be replicated in China - and if this logic extends also to Model Y - then Tesla's annual volume in China alone would eventually exceed 650k units," analyst Alexander Potter said in a note on Thursday.

China's vehicle registration data showed a 19% jump in sales of Tesla Model 3 in the last three months, Piper said.

Shares of Tesla have doubled in just three months, soaring 96% to $481.34 on Thursday. Tesla recently launched the Model Y in China and started delivering the first Tesla Model 3 cars out of the new Gigafactory in Shanghai.