Tesla will soar to $500 if it can shore up its Model 3 production, analyst says (TSLA)

Tesla’s Model 3 could save the electric-car maker from its recent financial woes, one analyst said Monday.

Alexander Haissl, an analyst for German investment bank Berenberg, says shares will hit $500 — 80% above where the stock was set to open Monday — thanks to high profit margins on the Model 3 sedan.

“From production bottlenecks to quality issues, consensus has largely dismissed the prospect of 25% gross margin on the Model 3,” Haissl told clients. “But the widespread assumption that Model 3 margins can be directly inferred from Model S/X is inherently almost totally flawed.”

The Model 3 also reduces some fixed assembly costs from its predecessor the Model S that helps it get a leg up on traditional automakers, Haissl says.

“Premium content that comes as standard on the Model S lifts the cost per kg to 50% above premium OEMs,” Haissl wrote.

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