Morgan Stanley analyst Adam Jonas raised his price target on Tesla (TSLA) shares to $500 from $360 and raised his "bull case" price to $1,200 from $650 to reflect a scenario where the company achieves 4 million units of auto volume by 2030 with a 12% operating margin.

This compares to his base case scenario, wherein Tesla achieves 2.2 million units and a 10% operating margin by 2030, Jonas noted. The analyst, who believes investors should expect "a very challenging" first quarter, said his "bull case" is based on "aggressive unit volume outcomes that may push the limits of both demand and capacity to supply."

Jonas reiterates his Underweight rating on Tesla shares.