Tesla Motors Inc (NASDAQ:TSLA) will release its second-quarter results on Thursday, July 31 after the market closes. The EV maker announced earlier today that it had finally signed a definitive agreement with Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752) to build the Gigafactory. Under the terms of the deal, Tesla will provide and manage lands, buildings and utilities. The Japanese company will invest in the manufacturing equipment, machinery and tools. Panasonic will produce and supply lithium-ion cells.

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Tesla may offer a weak Q3 delivery outlook

Morgan Stanley analyst Adam Jonas expects Tesla to report $850 million in revenues, a little higher than the consensus estimate of $811 million. Jonas forecasts earnings of $0.11 compared to the Wall Street estimate of $0.04. Jonas believes that certain items in Q2 results could weigh on the stock. Tesla still has significant opportunities. Jonas said in a research note that the company’s unique position in EV market, performance engineering and energy storage is not fully appreciated by the market, which remains focused on short-term news flow. The market’s near-sighted lens could offer significant opportunities for long-term investors.

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Morgan Stanley expects Tesla to provide a weak third-quarter guidance. The company’s Fremont plant is going through an extensive reconfiguration and retooling to prepare for higher volume and Model X. It may cause short-term supply constraints, which is likely to reflect in Q3 outlook. The research firm forecasts Q3 Model S deliveries of 9,350 units, but Jonas warned that the guidance could be well below 9,000.

Tesla’s North America shipments expected to decline 30%

Moreover, North America shipments are likely to decline about 30%. Tesla has prioritized international roll-outs. But the decline in shipments would leave some investors wondering whether markets such as California are nearing saturation. Morgan Stanley expects Tesla to have built a very strong order backlog in China, the world’s largest market for premium vehicles. Adam Jonas estimates China to account for 22% of Tesla’s total shipments by 2020 and 31% by 2028. However, the journey in China will be bumpy, filled with regulatory, fiscal and technological roadblocks.

Tesla shares gained 0.17% to $229.27 at 9:53 AM EDT on Thursday. Morgan Stanley has an Overweight rating on the stock.