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UBS more than doubled its price target for Tesla on Tuesday, from $325 to $730, while keeping its neutral rating, citing the electric car maker's emerging leadership in software.

"Tesla has the potential to become one of the most valuable software companies," the team of analysts, led by Patrick Hummel, said in a note."This is the next battleground and main driver of valuation from here, in our view."

Tesla's narrative, the analysts said, is no longer about winning in electric vehicles where it has already established market leadership, but rather in software. 

They predict Tesla will become one of the largest and most profitable original equipment manufacturers globally by 2030, projecting an estimated $200 billion market value for that segment of its business. 

"We think the lion's share of this value can be generated by software, mainly autonomous driving," UBS analysts said. "No other carmaker is closer to monetize fully autonomous driving for everyday use, and the scalability of Tesla's technology creates the biggest software-driven revenue opportunity in the industry, in our view."

They also said Tesla will be the most profitable player in the electronic vehicle space for years to come, even as competition heats up.

Tesla shares have jumped 360% in the past year. Shares were lower on Wednesday, trading at $669.20 at 2:43PM ET. 

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