People attend a Tesla performance driving school promotional event at Shanghai International Circuit
People attend a Tesla performance driving school promotional event at Shanghai International Circuit in Shanghai, China, August 22, 2019. Picture taken August 22, 2019. (Photo: REUTERS/Aly Song)

Europe sales for the Tesla Model 3 appears to be working in the company's favor. Wedbush Securities analyst Dan Ives published a note on Thursday stating that a "steady demand" for the Model 3 in Europe will greatly benefit Elon Musk's company should there be challenges in other regions like China.

Analysts at Wedbush observed that Norway continues to be Tesla's primary source of demand in the whole of Europe, alongside Germany and the Netherlands. According to Ives, Tesla still has a lot to face in terms of broader demand concerns and profitability issues, but in Europe, there is a "positive development" for the automaker.

Ives maintains the equivalent of a "Hold" on Tesla stock, together with a price target of $220 per share.

The Tesla analysis of the company's performance in Europe by Ives and his team at Wedbush follows the reports that Tesla is set to increase the value of its cars in China this Friday. According to several reports, the upcoming price hike is partly due to the value of yuan, which has been weakening against the US dollar.

For Tesla's part, however, several analysts believe that the upcoming price hike in China would benefit the automaker in the long run. One of the analysts, long time TSLA bull Ben Kallo from Baird, noted that the impending price increase is indicative of the company's confidence in terms of the demand of its products.

"We view price increases positively. Companies don't typically increase price if there are demand worries," Kallo said.

Meanwhile, Jeff Osborne of Cowen believes that the higher prices in China does not mean Chinese consumers will stop buying Tesla's electric cars. According to Osborne, there will always be a group of buyers that are not sensitive with price increase whatsoever.

"Our view is Tesla feels they can raise the price slightly and not impact elasticity of demand," Osborne said.

Tesla's continued operations in China means that the company foresees a boost in sales in the near future. In fact, Tesla is set to open its Gigafactory 3 site in China soon. The new site will produce the Model 3 for the local Chinese market.

Elon Musk revealed in a recent event that the trial Model 3 production runs will start before the year ends, though it is widely reported in Shanghai that trial manufacturing could begin as early as September 2019.  Tesla is yet to confirm if this is true.