Morgan Stanley upgraded Tesla Motors (NASDAQ: TSLA) from Equalweight to Overweight with a price target of $305.00 (from $242.00).

Analyst Adam Jonas comments "Adding 75k additional units of Model 3 to our 2018 estimate and nearly 100k units to our 2020 estimate results combined with the out-year impact adds a combined $81 to our Tesla target. Small offsets from the 4Q delivery pre announcement and higher capex takes our target to $305. Excluding the value of Tesla Mobility ($76/share) our price target would be slightly below the current share price. Over 100% of the upside to our $305 price target can be attributed to the value we ascribe to Tesla Mobility. We still apply zero value to Tesla from its recently completed acquisition of Solarcity and zero value for Tesla Energy."

Jonas' 4 key drivers of his upgrade are:

We have revised Model 3 launch timeline and volume estimate, with a significant positive impact on earnings and our price target. The market is moving Tesla’s way on EVs. A recent pull back in efforts by tech firms to make complete vehicles represents a sea change in competitive pressure that we felt represented a great concern to Tesla over the past 2 years. Gigamerica: Tesla stands at the epicenter of US high tech manufacturing job creation which may benefit more than just symbolically under the new administration.

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Shares of Tesla Motors closed at $238.36 yesterday.