Elon Musk, CEO of Tesla Motors Inc. (NASDAQ: TSLA), made news this week announcing that China orders had slowed down for the Model S. However, strong orders in Europe and an uptick in orders in North America offset this weakness. Earlier in the year, Tesla talked about China as a major growth driver, so naturally a weak order flow would cause some concern.

The weak orders in China were the result of poor consumer communication by Tesla on how to get chargers installed at home.

Overall, Goldman Sachs is not making a change to its long-term thesis for three reasons. First, the firm believes that electric vehicles are a better technology. Tesla will also achieve cost parity with internal combustion and any premium they charge will result in excess margin, and cost parity for a better technology will make fuel prices irrelevant. Finally Tesla’s experience, brand equity and technology will give it a sustainable competitive advantage.

Near-term earnings and demand are by and large irrelevant to the long-term thesis. However, near-term issues are very relevant to the stock price. Investor sentiment in the near term is currently negative and 2015 will be a tricky year for Tesla.

Looking at the near term, issues that Tesla will have to deal with are practically all sales related. European demand was largely flattish in 2014, and China is expected to be a year away from becoming a big market. The big question is whether Tesla will hit 50,000 in Model S sales in 2015. This is achievable because the company is already producing at that level and expanding into new foreign markets such as Australia and Japan. A recent partnership with a third-party bank to launch a U.S. lease program could prove to be fruitful as well in the U.S. luxury market.

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Goldman Sachs detailed in its report:

While there is risk, the reward is very compelling if Tesla hits its sales targets in 2015: With Model X production likely fully ramped up by 2015 year end and with another year to lay proper groundwork in the biggest luxury market in the world (China), 2016 sets up to be a fantastic year for growth and one where visibility will likely be much higher. And we believe growing that strongly in 2015 would largely address the “Tesla will run out of early adopters” argument that is a key part of the Bear thesis. We expect concerns to remain high up until fourth quarter earnings release, particularly as we see a good possibility that additional launch issues on the P85D in December could lead to a miss on delivery guidance for fourth quarter. But on the other hand, profitability guidance for first quarter should be outstanding, given the very rich mix of high-end vehicles likely to be sold that quarter. And we’d expect Tesla to provide a bit more visibility on forward order flow / backlog.

As a result, Goldman Sachs maintained an Outperform rating for Tesla with a price target of $325. The price target implies upside of 69% from current prices.

Shares of Tesla were flat at $191.93 in Friday’s afternoon trading. The stock has a consensus analyst price target of $273.21 and a 52-week trading range of $164.71 to $291.42.

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