What happened

Shares of Tesla (NASDAQ:TSLA) climbed 26.8% in December, according to data from S&P Global Market Intelligence, on growing enthusiasm about the company's China operation and some bullish comments from key analysts. This automaker has been a battleground stock between bulls and bears for the better part of a decade, and the bulls of late have been on the ascendancy.

So what

Tesla historically has been constrained by having only one manufacturing facility, famously erecting a tent at its Fremont, Calif., factory to temporarily boost capacity. That's all set to change when the company opens a second assembly plant in Shanghai, and investors in December cheered word that the company had received a 11.25 billion yuan loan ($1.62 billion) from Chinese banks and planned to begin deliveries of Chinese-built cars.

The Model Y driving outside of an urban landscape.

Tesla's forthcoming Model Y, another reason investors are excited about the stock. Image source: Tesla.

The opening is boosting optimism about the stock. Morgan Stanley's Adam Jonas early in the month raised his bull case price target on Tesla to $500 from $440, thanks to excitement about China and the company's recently unveiled Cybertruck. And Credit Suisse's Dan Levy, traditionally a bear who has a price target well below the company's current range, in a note said that "we believe Tesla is leading in the areas that will likely define the future of carmarking," namely software and electrification.

Now what

Tesla's momentum has continued into January, with the shares climbing 6.8% during the first few days of the month after the automaker announced fourth-quarter and full-year 2019 vehicle delivery numbers that beat the low end of the company's guidance.

A lot of questions remain unanswered. Tesla's moving a lot of metal, but we won't know until its earnings report on Jan. 29 what gross margin is or whether it's performing profitability. There's also a question of whether the sales surge is sustainable or fueled by buyers who are rushing in before tax credits on electric vehicles expire, not to mention the fog of investigations including questions about the company's highly touted Autopilot driver assist tech.

Tesla has done a good job establishing a market for electric vehicles, and its shares have soared as a result. But the company is priced at more than 80 times expected earnings despite significant unanswered questions about profitability and a coming onslaught of new electric competition from traditional automakers. Tread carefully.