Tesla Motors Inc (NASDAQ:TSLA) shares rose more than 1% during the regular trading day today, suggesting that maybe, just maybe, the stock has stabilized (hopefully I haven’t jinxed it here). Bullish investors remain focused on the automaker’s long-term potential rather than the near-term problems it faces. Chris Umiastowski of The Globe and Mail, added the stock to the Globe Investor’s Strategy Lab portfolio.

Tesla motors

He said the decline in stock price makes it look more attractive now than it was when it approached $200 a share.

Tesla shares drop, but business stronger

Umiastowski believes that in spite of the falling price of Tesla Motors Inc (NASDAQ:TSLA) shares, he thinks the business as a whole has become stronger. He says he is now even more confident in the long-term potential of the automaker and wants to take advantage of the current discount on its shares.

He says one of the main reasons Tesla shares struggled this month was the company’s guidance. Wall Street wasn’t too keen on the December guidance or on the fact that supply for Tesla’s batteries remains constrained. However, he says the reason Tesla’s December guidance was weak was because many of the Model S sedans the automaker produces during this quarter will be put on ships and sent to customers in Europe. The automaker can’t recognize those cars as being sold until they are delivered.

What about Tesla’s battery problem?

Umiastowski notes that momentum investors were probably many of those who decided to exit Tesla Motors Inc (NASDAQ:TSLA) recently, especially because of the battery supply problem. However, he does not see this as being an issue in the long term. He notes the expanded deal with Panasonic to increase battery cell production to 1.8 billion over the next four years. He estimates that those cells will cover more than 250,000 vehicles

In his estimates, Tesla could sell 100,000 vehicles (including both Model S sedans and Model X crossovers), per year within the next two or three years. And when you add to that the rumors that Tesla is considering a major partnership with at least one more supplier for batteries and the automaker’s considerations about building a massive battery factor, he estimates that the company could end up building hundreds of thousands of vehicles every year.

Tesla’s earnings power could become huge

Tesla Motors Inc (NASDAQ:TSLA) already has a lead on battery pricing as other automakers struggle to create long-range vehicles at a decent cost. He believes the company could extend this lead once the deals to boost battery supply are in place.

Umiastowski sees Tesla’s earnings power hitting between $8 and $10 by the 2016 fiscal year, even without the impact from the Generation III mass market vehicle. Under his estimate, then the current share price is around 13 times earnings.

He admits that Tesla Motors Inc (NASDAQ:TSLA) is still a risky investment, but he believes that because of the rave reviews on the Model S, the automaker will be able to deliver on expectations.