Morgan Stanley analysts are upgrading automaker Tesla's stock to overweight and significantly boosting their price target, citing improved hopes for the Model 3 launch, better prospects for electric vehicle production, less competition and a "supportive political environment."

Morgan Stanley analysts on Thursday raised Tesla's price target to $305 from $242 by the fourth quarter. Tesla's share price closed at $238.36 on Wednesday. They also raised their earnings predictions for the quarter and for fiscal year 2018.

The new earnings forecast is largely driven by revised predictions for the Model 3 release. Analysts see a "soft" Model 3 launch coming in the fourth quarter and volume ramping up significantly in 2018, though still lower than the company's 500-unit target.

More broadly, Morgan Stanley improved its outlook for electric vehicle production across the industry, as regulatory pressures rise and EV popularity increases.

"The market is moving Tesla's way on EVs," Adam Jonas and Paresh Jain said in the report. The analysts said global EV penetration would grow 23 percent by 2030, versus previous estimates of 16 percent. In that time, they said, Tesla's share of the EV market would fall from 10 to 4.5 percent.

But the analysts don't think competition will be a hurdle for Tesla in the short term. The shift in focus of Alphabet's self-driving car project, Waymo, to making better drivers rather than better cars eliminates immediate competitive concerns between the tech giants, the report said.

Morgan Stanley's final reason for the upgrade revolves around a "surprisingly supportive political environment" and the "strategic relationship between Tesla leadership and the new administration."

Analysts believe Tesla CEO Elon Musk's connection to President-elect Donald Trump through the latter's strategic and policy forum will prove fruitful for creation of high-tech, high-skilled manufacturing jobs.