Nomura sees Tesla selling all it can produce after Model 3 sedan spin

In a research note titled “Better Than Advertised,” Nomura Instinet Romit Shah says he left test driving Tesla’s (TSLA) Model 3 sedan feeling the automaker will be selling as many cars as it can produce for a long time.

Taking the sedan for a spin reinforced the analyst’s view that Tesla’s addressable market opportunity is “perhaps much larger” than the BMW 3-series, Mercedes C class and Audi A4.

There is a “real passion” for the brand, which is “bigger than loyalty because much of the enthusiasm comes from people who have never owned a Tesla,” Shah tells investors in a research note.

The only comparable product the analyst sees is Apple’s (AAPL) iPhone. Apple succeeded because the world shifted from computers to smartphones and Apple had the best product, the analyst writes.

Similarly, he believes there is a secular shift today from internal combustion engines to electric vehicles and that Tesla has the best product.

If Tesla can overcome its operational challenges, it will see “unprecedented revenue growth and strong cash flows,” Shah concludes. He has a Buy rating on Tesla with a $500 price target.

The automaker closed yesterday down $1.66 to $304.39.

Production Rate

Tesla produced just over 440 Model 3 vehicles since the automaker began production in July, meaning the company built about 180 of the cars last month, electrek reports, citing sources familiar with the matter.

Tesla CEO Elon Musk, who hopes to ramp up production to 5,000 vehicles a week in December following production challenges, said on the company’s conference call he would not provide the number of vehicles produced in October as “people would just read too much into it.”

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