After Baird Equity Research’s Ben Kallo updating his Tesla (TSLA) stock price target with Model 3 deliveries, now Morgan Stanley’s Adam Jonas follows with his own update today.

The analyst also had to increase his delivery expectations for the Model 3 after Tesla launched the production version of the all-electric sedan a few weeks ago.

Jonas raised his price target from $305 to $317, which is still below Tesla’s current stock price, but he also increased his bull case to $526.

He wrote in the note to clients today:

“Now that the first employee deliveries have been made, we are forecasting Model 3 volume in Q3 of 1,500 units vs. 0 units until Q4 previously. An 8,000 unit increase in our Q4 Model 3 volume estimates and smaller increases in Model X volume leaves us with a full- year unit estimate of 106,552 vs. 96,219 previously. Our outyear Model 3 estimates also increase – e.g. to 120k in 2018 vs. 90k previously. We have reduced the Model 3 ATP to $50,000 vs $60,000 previously, which slightly tempers the revenue impact but could arguably be positive for Model 3 demand in the long term.”

It’s the latest example of Wall Street starting to get behind the idea of Tesla actually delivering the Model 3 on time – though Jonas is still keeping his expectations significantly below Tesla’s for 2018 Model 3 deliveries.

The Morgan Stanley analyst also notes that with $2 billion in expected capital expenditure during the second half of the year, Tesla is now almost spending like established automakers who ship millions of cars per year:

“This level of spending approaches the vicinity of established OEMs (i.e. Honda and Nissan) and is one-half or more the spending levels of GM and Ford.”

Of course, those investments are going into Tesla’s factories in order to enable them to reach production volumes in the millions of vehicles per year – something Tesla hopes to achieve in just a few years.

As always, Jonas focuses on Tesla’s core automotive business, which currently represents the vast majority of the company’s revenues. The analyst doesn’t place much importance on Tesla’s energy business.

Adam Jonas is ranked #444 out of 4,618 analysts on Tip Ranks with a 53% success rate and an average return of 11.6%. Here’s his track record on Tesla’s stock:

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