Tesla Motors TSLA

Tesla Motors Inc NASDAQ:TSLA stock surged 2.09% to $283.18 in early trading Monday after FBN Securities issued a bullish report on the stock. FBN Securities analyst Shebly Seyrafi said in a research note that they have initiated coverage of the stock with an Outperform rating and $325 price objective. Seyrafi said Tesla’s Model S is outselling other luxury sedans “by a wide margin.”

Tesla Model S

Tesla’s Model S has plenty of room to grow

What’s more, Model S has minimal penetration, so there is plenty of room to grow. The North American light vehicle market is at 16 million units and it grew at 9% in July this year. The research firm expects Tesla to ship 35,000 units in 2014. It means Tesla’s market share is less than 0.2% of the total North American light vehicle market. So, there is ample of room for the San Francisco-based company to keep growing for years to come.

Tesla-1

In its report, FBN also praised The EV maker’s strong product line-up. The company will launch its highly-anticipated Model X next year. Model X pre-orders exceed 15,000, indicating strong demand for the car users haven’t seen yet. Tesla will launch its Model 3 in 2017. FBN says the Model 3 will exponentially increase Tesla Motors Inc NASDAQ:TSLA’s sales as it will have a much lower price than the Model S. The Model 3 is expected to have a price tag of $35,000-$40,000.

Tesla Motors Inc NASDAQ:TSLA is targeting deliveries of 500,000 units per year by 2020. FBN Securities says Model 3 will drive much of the mass market adoption. The research firm says the 500K delivery would consist of 100K-200K of Model S and Model X, and 300K-400K units of the Model 3. The Elon Musk-led company expects its Gigafactory to reach its peak production by 2020. The giant battery factory will “tremendously” reduce the company’s battery costs.

Gigafactory to tremendously reduce Tesla’s battery costs

On July 31, Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752) confirmed that it would work with Tesla on Gigafactory. The factory will require an investment of $4-$5 billion. Tesla will invest 40%-50%, Panasonic will contribute 30%-40%, other manufacturing partners will pour in 10%-20% and the remaining 10% will come in the form of state incentives. The Gigafactory is expected to produce 50GWh of battery packs per year.

Tesla Gigafactory

What’s more, the EV maker plans to triple the number of Supercharger stations. As of July, 2014, the company had 156 Superchargers. FBN expects the density of Superchargers to increase significantly by the end of 2015.