Tesla's valuation will hit $1 trillion in 2021 as demand soars in China, Wedbush says

• Tesla will be a $1 trillion company by the end of 2021, says Wedbush analyst Dan Ives.
• In a Thursday note the analyst said "eye popping demand" in China will drive Tesla's market cap higher.
• If Tesla's valuation hits $1 trillion, it would be the fifth-most-valuable US company based on current levels.
• Watch Tesla trade live here.

Tesla's market capitalization will soar to $1 trillion in 2021 as demand in China could grow to "eye popping" levels within the next two years, according to Wedbush's Dan Ives.

In a Thursday note the senior tech analyst highlighted that China is the "linchpin of growth" for the EV market and Tesla's flagship Giga 3 factory gives the electric-vehicle maker a "major competitive advantage" against other names.

"If China stays on its current path for Tesla, Musk & Co. could hit one million delivery units globally by 2022. This speaks to our thesis that Tesla will hit a trillion dollar market cap in 2021 despite this risk-off moment for EV stocks with the bears coming back to life after a long hibernation in their caves over the past year," Ives said.

If Tesla's valuation hits $1 trillion, it would be the fifth-most-valuable US company based on current levels.

After an incredible 740% gain in 2020, Tesla's stock price has lost 10% in 2021 and now sits at its lowest point in over two months. Recent complaints from Chinese government officials concerning battery fires, unexpected acceleration, and software update failures, have likely weighed on Tesla shares, as well as chip shortages across the auto supply chain.

Ives said the chip supply chain should be "normalized" in March, and the recent sell-off presents a "massive buying opportunity," as the world heads into the "golden age of EVs."

"While the stocks and the EV space is clearly going through a digestion period, we view this as a short-term pullback in a multi-year upward rally," said the analyst.

Ives has a "neutral" rating for Tesla's stocks and a 2021 year-end price target of $950. The analyst has previously stated that the EV maker could deliver one million units by 2022 driven by demand from China.

Shares of Tesla were trading at $653 a share as of 11:00 a.m ET Thursday.