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How will Tesla share price fare once China-made Model 3 hits the road?

The electric car marker’s share price could potentially rally around 50% in the coming months, according to Morgan Stanley analysts.

US electric car manufacturer Tesla, Inc. (NASDAQ: TSLA) has qualified for subsidies from the Chinese government for a new batch of locally-made cars due for delivery in late-January.

Two versions of the Tesla Model 3 sedan have been placed on the Ministry of Industry and Information Technology’s recommendation list for new energy vehicle subsidy, Reuters had reported.

Buyers will receive a subsidy of up to 25,000 yuan (US$3,550) for the purchase of each car. This represents a discount of around seven percent from the proposed sale price of US$50,000.

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Stock value up 4.4% in 2019 alone

Following the news, IG figures showed that Tesla’s share price surged at least 0.74% on Friday 06 December to close the week at US$335.27 per share.

This latest update comes hot on the heels of the new Cybertruck model’s recent launch in the US. Demand for the fully stainless-steel car, unveiled last month, is already through the roof, even though production is slated to start in 2021.

According to CEO and founder Elon Musk, the Tesla Model 3 had received 250,000 initial deposits as of 27 November.

In terms of 12-monthly share price, Tesla stocks have risen roughly 4.4% in value since the start of this year.

Analyst: Share price to skyrocket

On the back of these developments, a team of Morgan Stanley analysts have stated that there is a possibility share price could become even more bullish in the coming months.

‘We raise our bull case to $500 to account for the newly unveiled Cybertruck, and a more optimistic scenario in China,’ Morgan Stanley shared in a media note.

They further estimated that sales of the Cybertruck could hit 100,000 units by 2024.

However, the analysts clarified that these figures are a best-case scenario.

‘To be clear, we are not bullish on Tesla longer term, especially as, over time, we believe Tesla could be perceived by the market more and more like a traditional auto original equipment manufacturer,’ they said, adding that the original base price target of US$250 remains unchanged.

Lead analyst Adam Jones also noted that investors should probably tread with some level of caution, since US-China trade negotiations are still ongoing.

Tesla shares closed at US$341.26 on Monday 09 December.

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