Concerns about Tesla's (NASDAQ:TSLA) electric-car sales in China have mounted recently, creating some worries about the growth stock's lofty valuation. Indeed, GLJ Research analyst Gordon Johnson says he believes Tesla's monthly vehicle deliveries in the important auto market have peaked at around 20,000. "Should this prove to be the case, that would take a massive chunk out of the TSLA bull case," the analyst said in a note to investors on Tuesday.

But one analyst remains resolutely bullish on Tesla shares: Wedbush analyst Daniel Ives. Here are his thoughts on the China situation and the company's overall potential.

Model X interior

Model X. Image source: Tesla.

A major opportunity

Though Ives admits that Tesla's second quarter may have started off rocky in China, he believes that things will smooth out over time since the market opportunity is so significant. He notes that he expects electric-vehicle sales as a percentage of total annual auto sales in the market to increase from 5% to 10% over the next 10 years. As a pure-play electric-vehicle manufacturer, Tesla is positioned to benefit, Ives believes.

Further, the analyst notes that recently released data from China Passenger Car Association (CPCA) points to a 29% jump in monthly Tesla vehicle sales in May, compared to April -- though 11,527 of the 33,463 were exported. Nevertheless, with a reported 33,463 deliveries, the company's China manufacturing seems to be contributing meaningfully to Tesla's overall sales. For reference, Tesla delivered about 185,000 electric vehicles globally in its first quarter of 2021.

Tesla has invested aggressively in the China market, building a major factory in Shanghai. Indeed, its China market currently has enough tooling installed to build 450,000 vehicles annually, though it may take time for Tesla to ramp up production enough to achieve this capacity.

"Model Y ramp in Shanghai is progressing well," Tesla said in its first-quarter update. "We expect that our Shanghai factory will continue to increase quarterly production output through the year."

The path to $1,000

Ives has a $1,000 12-month price target on Tesla stock, representing 67% upside from where shares are trading today.

The analyst's $1,000 price target for the stock was established after Tesla announced first-quarter deliveries that crushed analyst estimates. At the time of his price-target increase, he said he thinks Tesla deliveries could exceed 850,000 this year -- a huge jump from approximately 500,000 deliveries last year.

While these analyst opinions can be informative, investors should focus less on month-to-month and quarter-to-quarter deliveries and more on Tesla's year-to-year execution. It's difficult to gauge how a company's sales are trending or its expansion is faring over periods of months or quarters.

Let's zoom out and see what happens for the full year. The automaker's total 2021 deliveries in China relative to its total deliveries in the market in 2020 and 2019 will likely be more telling about the company's long-term sales trajectory in the market.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.