Tesla Motors Inc (NASDAQ:TSLA) has been the focus of much controversy as investors debate whether the recent surge of its stock price is the result of a short squeeze. Barron’s contributor Bill Alpert believes that a short squeeze is “one ingredient” in the tripling of Tesla Motors Inc (NASDAQ:TSLA), and he’s probably right, but there’s more to the story.

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Shares fell as much as 3 percent after Alpert’s article but then recovered.

Tesla’s Battery Technology

One of the main areas of focus has been Tesla’s Generation III vehicle, which is expected to be priced between $30,000 and $40,000. Alpert believes that we must see a great leap in battery technology in order for the automaker to reach that price point, which it needs in order to sell the hundreds of thousands of vehicles annually analysts expect in the future.

He’s skeptical that we’ll see such a leap, but personally I can’t believe CEO Elon Musk would make the kinds of comments he made about the Gen III vehicle without being absolutely positive he could pull it off. Last week he said we’d see no SpaceX initial public offering any time soon, essentially because the company just isn’t ready for it. I’d have to think he would be sure he could pull something off before he makes any kind of claim, about battery technology or anything else.

The Problem With Tesla Motors’ Multiple

Nonetheless, the multiple at which Tesla Motors Inc (NASDAQ:TSLA) shares are trading at is still a cause for concern, so there’s little doubt that a short squeeze is affecting the stock. Even bullish analysts put Tesla at only 30,000 units for next year, which according to Alpert, means that the company might earn $1 per share excluding stock options expenses. That means at around $100 per share, the stock is selling at “around 100 times next year’s earnings forecast.”

Of course there’s no accounting for premiums, and we’re certainly seeing a premium stock price on Tesla Motors Inc (NASDAQ:TSLA). The real question is just how much of a premium investors will give the company once the short sellers have finished covering.