Tesla (TSLA -2.51%) shares have officially split, with split-adjusted trading beginning on Thursday morning. At the time of this writing, the stock is trading not far below $300. But one analyst thinks shares could soar from here, rising to $360 over the next 12 months. Capturing just how bullish this analyst is, the price target represents more than 20% upside from here.

A key theme behind the analyst's optimism is Tesla's improving production capacity. To this end, the Wedbush analyst thinks annual deliveries can soar next year, rising from less than one million in 2021 to about two million in 2023.

While such staggering growth may seem unrealistic at first glance, Dan Ives' prediction for Tesla to deliver two million vehicles in 2022 is actually quite conservative upon closer examination.

The path to 2 million units

Ives increased Wedbush's 12-month price target for Tesla stock from a split-adjusted $333 to $360 on Wednesday afternoon, citing Tesla's improving production rates at its high-output factory in China and the company's overall momentum heading into the end of the year. 

Tesla's factory in China suffered major setbacks earlier this year when the Shanghai government restricted factory operations as part of its efforts to slow the spread of COVID-19. But the automaker said in its second-quarter update that production rates at the important factory have not only rebounded but have risen to record levels by the end of the period. 

When investors view this momentum alongside Tesla's reported continued improvement at its factory in California and its ramp-up in production at new factories in Texas and Berlin, two million deliveries in 2023 begin to seem within reach. After all, Tesla's factories are already tooled for annualized production rates of more than 1.9 million units annually. And Tesla management hasn't indicated any intention to slow down its investments in production capacity expansion.

Further, management has indicated that it expects to have its current manufacturing capacity fully utilized by the end of the year. Indeed, Tesla CEO Elon Musk said in the electric-car company's second-quarter earnings call that the company has "a good chance of exiting this year at [a production rate of] 40,000 vehicles a week." This, of course, translates to an annualized run rate of more than two million units a year.

Tesla vehicle production at the company's factory in California.

Tesla factory. Image source: The Motley Fool.

Rapid growth won't stop at 2 million

While delivering two million vehicles next year would be an exciting achievement for Tesla, it would represent only a fraction of the company's vision. CEO Elon Musk said at Tesla's annual shareholder meeting that the company eventually hopes to have built 10-12 factories, with the new ones supporting massive output of around 1.5 to two million vehicles per year. In fact, another location for a factory would be announced later this year, according to Musk.

There are risks, of course, to Tesla's growth expectations. First of all, there's a risk that management's view of the company's growth potential is just too optimistic. The second major risk is more top of mind to investors lately -- that's the risk surrounding the global supply chain required to support the growing production of complex products like electric vehicles. The recent macro and geopolitical environments have shown that global supply chains are often more fragile than investors might think.

But even in spite of recent challenges, Tesla is clearly executing extraordinarily well -- and a record-breaking second half and a strong start to 2023 appears all but certain at this point (assuming no major setbacks come out of left field).