An Evercore ISI analyst is now convinced that the Tesla Model 3 roll-out will be pulled off without a hitch.

Tesla Model 3

Tesla Model 3 "release candidates" have hit the road for product validation

Analyst Arndt Ellinghorst has raised his target price for Tesla to $330 from $320 and says that:

"...we believe that an EBIT margin range of c12 to 15% is achievable in the long-term, once growth normalizes and SG&A and R&D ratios approach industry average. In other words, Tesla has the potential to achieve margins which are double those of US peers today."

There'd been doubt on Wall Street that Tesla could roll-out the Model 3 on time, but analysts now seem increasingly convinced that Tesla can pull off the near-impossible.

As Motley Fool states:

"The analyst sees diminishing risks that the rollout of Tesla's new Model 3 sedan will be a bust. In fact, assuming the rollout goes well, and projecting Tesla's recent "3-year forward market multiples" into the future, Evercore thinks it's reasonable to assume this valuation will hold steady as Tesla ramps production on its newest electro-buggy."

Much of this change of heart in regards to the Model 3 roll-out comes after Tesla's Q1 earning report in which Musk once again reiterated Tesla's production goals.

Motley Fool explains:

"Model 3 vehicle development is nearly complete" and "on plan to start production in July." Tesla expects to achieve production of "5,000 vehicles per week at some point in 2017, and ... 10,000 vehicles per week at some point in 2018."

"At some point" isn't very precise, but even if Tesla can only crank out 5,000 per week for all of 2018, that's still 250,000 Model 3s in that year alone. 500,000 doesn't need to be achieved for us to consider Model 3 production a success. 250,000 would more than satisfy.

Source: Motley Fool

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