3 Tesla Pros On The Automaker's China Milestone

Tesla Inc TSLA CEO Elon Musk celebrated the launch of the company's new manufacturing plant in China and delivery of the first Chinese-made Model 3s by dancing onstage. The audience was clearly delighted with Musk's moves, but are Street analysts and experts in a similar celebratory mood?

Luxury Vehicle Or Electric Vehicle?

The launch of Tesla's new manufacturing plant comes at a time when it isn't fully clear if its cars will compete in the luxury segment or against other electric vehicles, Roth Capital Partners analyst Craig Irwin said Tuesday on CNBC.

Most people assume Tesla will compete against domestic electric vehicles in China, but they are wrong, he said. 

Tesla will compete directly against top-tier luxury vehicle makers, so assuming it will see a straight line growth trajectory is "pretty tricky," the analyst said. 

Tesla also doesn't operate in a vacuum in China and will face heavy competition, Irwin said. 

$900 Per Share?

China is the world's largest market for electric vehicles, but most cars in the country sell for around $15,000, which places Tesla's car at a much higher price point, Loup Ventures co-founder Gene Munster also said on "Squawk Box."

Assuming Tesla's sales in China equal the proportion of Apple Inc.'s AAPL business — at around 17% of total sales — the case for a $150-billion market cap, or $900 per share, can be made, he said. 

China accounts for around 11% of Tesla's total sales, so if the market reaches the 17% market, it would imply an annual growth rate of 20% for the next few years, Munster said.

With a "debatable but achievable" 10% operating margin rate and a 30 times multiple, shares could approximately double from currrent levels, he said. 

'Classic Case' Of A Disruptor

Foundation Capital's Paul Holland said on "Squawk Alley" that his profits on Tesla's stock from the China stock would have him dancing as well.

Tesla remains a "classic case" of a disruptor, and the latest milestone in China is no different, he said. 

Five years ago, Tesla vehicles were typically reserved for those living in the tech-heavy Silicon Valley, but they're now a global phenomenon, Holland said. 

"Terrific day for Tesla and well deserved because they innovated with a product that many of us really love." 

Tesla Price Action

The stock was up 3.88% at $469.06 at the close Tuesday. 

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Photo courtesy of Tesla.