While some analysts may be concerned lately over Tesla's ability to manufacture the Model 3 on time, one Wall Street firm believes his peers are missing the big picture.

Nomura Instinet's Romit Shah predicts Tesla will dominate the electric car industry like Intel did in the PC market during the 1990s.

"Tesla is vertically integrated, owning both the manufacturing and much of the supply chain, similar to Intel when it scaled revenues from $4bn to $34bn during the 1990s' PC era," Shah wrote in a note to clients Tuesday. "Whereas the limiting factor for PCs was processor performance, for EVs [electric vehicles] it is cost and battery range, and improving each primarily depends on advances in lithium-ion battery density … We believe that Tesla, much like Intel in the 1990s, is well positioned to accrue most of the profits in the electric vehicle value chain," he added.

Shah initiated coverage on the stock with a buy rating and set a 12-month price target of $500, representing 44 percent upside to Tuesday's close. It now has the highest Tesla price forecast out of the 19 research shops that cover the company, according to FactSet.

"I see Tesla as a technology company whose biggest asset is manufacturing and the end products happen to be electric vehicles and energy storage. You've got a company with exponential growth," Shah said on CNBC's "Power Lunch" Wednesday. "When we look at Tesla and where it is trading at today, we think there is a lot of room for the [valuation] multiple to expand."

The analyst said the economies of scale from Tesla's Gigafactory enables the company to manufacture batteries with the best energy density. As a result, the Model 3 costs $140 per mile of range versus the competition's $236 per mile of range, according to the analyst.

"We believe that Tesla has an insurmountable lead in vehicle range per dollar; benefits from what we believe is a largely inferior competitive field, which should help sustain current growth," he wrote.

Consequently, the analyst predicts Tesla sales will rise to $58 billion in 2021 from $8 billion last year. In addition, he estimates the company's total vehicles deliveries will increase to 877,000 by 2021 from an estimated 112,000 this year.

Wall Street "is concerned about production, as it appears that Model 3 will be severely supply-constrained; however, we believe this is a short-term issue," he wrote. "We see significant momentum for alternative energy vehicles globally and expect Tesla's Model 3 to lead the first stage of mass-market electric vehicle adoption."

Tesla is one of the best-performing stocks in the market this year. The company's shares are up 63 percent year to date through Tuesday compared with the S&P 500's 13 percent return.

Its shares rose 2 percent midday Wednesday after the report.