Investors have largely dismissed the prospect of 25% gross margin on Tesla’s Model 3 amid production bottlenecks and quality issues, Berenberg analyst Alexander Haissl tells investors in a research note. He believes the widespread assumption that Model 3 margins can be directly inferred from Model S/X is “inherently almost totally flawed.” The analyst thinks the Model S cannot reasonably be seen as the yardstick to measure the profitability of the Model 3. Haissl’s analysis indicates that Tesla will eliminate $28,500 of costs from the Model S to produce the Model 3. The Model 3 will be produced with efficiency levels at least on par with best-in-class manufacturers, the analyst contends. He says the Model 3 gross margin target “is not hope, but reality.” The analyst raised his price target for Tesla shares to $500 from $470 and keeps a Buy rating on the shares. The stock closed Friday down $7.72 to $276.82.