Wedbush Securities said China is becoming a“source of strength” for Tesla as it reiterated an 'Outperform' rating and $600 12-month price target, noting that the automaker's footprint in the country leaves it relatively well placed to weather Beijing's tighter rare-earth export controls.

The brokerage's report came after Tesla reportedly registered a longer-range Model Y+ variant in China, underscoring the company's continued product expansion in its largest overseas market. Analysts led by Daniel Ives said the new move aligns with what the firm views as a gradually improving environment for Tesla in China, describing it as a“tailwind for Musk & Co into 2026.”

Wedbush said the Chinese government's latest restrictions on rare-earth materials mark“another shot across the bow” for global automakers, but added that Tesla's scale in China is a positive factor. The firm noted that the Shanghai Gigafactory produces a significant portion of Tesla's global vehicles, giving the company some insulation from potential supply constraints. 

While raw-material tightening could still create short-term challenges, Wedbush said Tesla remains“best positioned among U.S. automakers” to manage disruptions.

The note said China's move to extend control from raw materials to technology and intellectual property could have broad implications for global auto supply chains, given the industry's heavy reliance on Chinese rare earths. Still, the brokerage suggested the“bark could be worse than the bite,” characterizing the new rules as part of an ongoing“game of poker” between Beijing and the Trump administration.

Wedbush said the“AI valuation will start to get unlocked” in Tesla's story over the coming months as autonomy and robotics take center stage. It pointed to growing Full Self-Driving (FSD) adoption and the planned Cybercab rollout as pivotal to the company's next phase, describing them as“the golden goose for Musk & Co.” 

The firm projected Tesla could reach a $2 trillion market cap in early 2026 and $3 trillion by the end of that year as volume production of autonomous and robotics platforms scales up.

The brokerage also described Tesla's introduction of lower-cost versions of the Model 3 and Model Y as“a good strategic move,” viewing it as an important step toward restoring a 500,000-unit quarterly delivery rate following the September 30 expiration of the U.S. EV tax credit. It added that the company's long-term growth story remains anchored in AI and autonomy as production for Cybercabs and Optimus ramps through 2026.

Wedbush forecasts 2025 revenue of $92.3 billion and 2026 revenue of $108.1 billion, with EPS rising from $1.68 to $2.80. It listed risks including a potential capital raise, meeting production targets on Model 3/Y, and regulatory or production issues at Gigafactory Shanghai.

On Stocktwits, retail sentiment for Tesla was 'extremely bullish' amid 'extremely high' message volume.

Tesla's stock has risen 8% so far in 2025.

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