Tesla stock will surge 27% to $500, according to this analyst

The electric-vehicle maker's investors could enjoy handsome gains.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla Inc's (NASDAQ: TSLA) new battery technology promises to accelerate the growth of the electric-vehicle market and widen its lead over its rivals.

So says Deutsche Bank analyst Emmanuel Rosner. On Wednesday, Rosner raised his rating on Tesla's shares from hold to buy and boosted his price forecast from $400 to $500. His new target represents potential gains for shareholders of roughly 27% from the stock's current price near $395.

Rosner applauded Tesla's goal of slashing its battery costs by more than half in the next three years, which he says could significantly improve its sales volumes and profit margins. In turn, he expects Tesla to produce more than 2 million electric vehicles and $15 in earnings-per-share by 2025. Thus, he urges investors to use the stock's recent pullback to buy shares at a sizable discount to its recent highs.

Is Tesla's stock headed to $500?

Following Rosner's upgrade, news broke that California plans to phase out gasoline-powered cars as a means to battle climate change. Governor Gavin Newsom issued an executive order requiring all new passenger vehicles sold in the state to be zero-emission by 2035. It also requires state agencies to work with businesses to "accelerate deployment of affordable fueling and charging options". 

If California's leadership in the battle against climate change spurs other states to enact similar plans, it could hasten the adoption of electric vehicles. That would be a boon for industry leader Tesla, and it could drive its shares to $500 and beyond in the coming years.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Joe Tenebruso has no position in any of the stocks mentioned.  The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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