Updated from 8:51 a.m. ET to indicate shares have hit an all-time high.NEW YORK ( TheStreet) -- Tesla Motors ( TSLA) shares soared to a new all-time high, gaining 8.3% in early trading to $179.95 after an analyst raised his price target on the stock, citing better-than-expected margin expectations for the third quarter. Deutsche Bank analyst Dan Graves raised his price target to $200 from $160, keeping his "buy" rating. Citing recent discussions with management and after monitoring Tesla owners' blogs, Graves believes there is a likelihood that Tesla outperforms margin expectations for the third quarter. He notes that "...demand has continued to grow in the US and Europe (despite substantial option pricing increases in effect as of late July), and that the production rate at Tesla's factory has continued to increase." On Tesla's second-quarter earnings call, CEO Elon Musk said he was pretty confident that the electric car maker would be able to achieve the 25% gross margin goal that's been publicly stated in the past. "Obviously, on average between Q3 and Q4, we need to do six points per quarter, so we need to make as quite as big an improvement as we did Q1, Q2, but obviously, so significant hill to climb and huge amount of work, but we feel pretty confident about the 25% number," Musk said. "And, it's important to note that we have visibility into these numbers more than ahead of time." Graves believes that gross margins, excluding Zero Emission Vehicle (ZEV) Credits, will hit 20% in the third quarter, up from 14% in the second quarter. That should get the company closer to its 25% goal by the end of the year. He also notes that Vehicle ID Number (VIN) assignments appear to support 30,000 units on an annualized basis, compared to his estimate of less than 25,000 units. The company is working on improving its supply chain to meet the exceptional demand for the car, which it can't make fast enough. Musk has talked about bringing more of the supply chain in-house, as some of Tesla's partners simply can't ramp up production fast enough. In addition to the continued better execution and strong demand for the Model S (the company delivered 5,150 units in the second quarter), Graves notes there is still exceptionally high short interest in the name, which could boost shares further. Approximately 22% of the free float, or 18 million shares, excluding the convertible hedging, is still held short. "With better visibility on the metrics that the Street is focused on (margin and demand), we see limited potential for negative catalysts in the near term," Graves wrote.