How will Tesla share price fare once China-made Model 3 hits the road?
The electric car marker’s share price could potentially rally around 50% in the coming months, according to Morgan Stanley analysts.
US electric car manufacturer Tesla, Inc. (NASDAQ: TSLA) has qualified for subsidies from the Chinese government for a new batch of locally-made cars due for delivery in late-January.
Two versions of the Tesla Model 3 sedan have been placed on the Ministry of Industry and Information Technology’s recommendation list for new energy vehicle subsidy, Reuters had reported.
Buyers will receive a subsidy of up to 25,000 yuan (US$3,550) for the purchase of each car. This represents a discount of around seven percent from the proposed sale price of US$50,000.
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Stock value up 4.4% in 2019 alone
Following the news, IG figures showed that Tesla’s share price surged at least 0.74% on Friday 06 December to close the week at US$335.27 per share.
This latest update comes hot on the heels of the new Cybertruck model’s recent launch in the US. Demand for the fully stainless-steel car, unveiled last month, is already through the roof, even though production is slated to start in 2021.
According to CEO and founder Elon Musk, the Cybertruck had received 250,000 initial deposits as of 27 November.
In terms of 12-monthly share price, Tesla stocks have risen roughly 4.4% in value since the start of this year.
Analyst: Share price to skyrocket
On the back of these developments, a team of Morgan Stanley analysts have stated that there is a possibility share price could become even more bullish in the coming months.
‘We raise our bull case to $500 to account for the newly unveiled Cybertruck, and a more optimistic scenario in China,’ Morgan Stanley shared in a media note.
They further estimated that sales of the Cybertruck could hit 100,000 units by 2024.
However, the analysts clarified that these figures are a best-case scenario.
‘To be clear, we are not bullish on Tesla longer term, especially as, over time, we believe Tesla could be perceived by the market more and more like a traditional auto original equipment manufacturer,’ they said, adding that the original base price target of US$250 remains unchanged.
Lead analyst Adam Jones also noted that investors should probably tread with some level of caution, since US-China trade negotiations are still ongoing.
Tesla shares closed at US$341.26 on Monday 09 December.
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