The stock price of Tesla Motors Inc (NASDAQ:TSLA) surged on reports that the electric car manufacturer’s Model S vehicle is becoming more popular in California. The stock is trading around $167.15 per share around 2’oclock in the afternoon in New York on Monday.


Tesla Model S is one of the top five selling models in California

The California New Car Dealers Association (CNCDA) released a report showing the Model S vehicle of Tesla Motors Inc (NASDAQ:TSLA) is one of the top five selling models California in the luxury and sports car segments in June of 2013.

According to the report, the Tesla Model S vehicle ranked third, based on the 4,724 registered cars during the period. The Mercedes E-Class and BME 5-Series were the top two most popular luxury and sports cars. The vehicles outperformed the Lexus GS and Audi A6.

Tesla popularity among consumers increasing

The report indicated that Tesla popularity increased significantly in June with 1,097 registrations for its Model S vehicle in California. In the same month last year, there were eight Tesla vehicle registrations in the state.

Given the spike of the stock price based on the CNCDA report, investors perceive that there is a significant demand for electric cars from the company. At present, Tesla accounts for only a small market share in the electric car industry.

The Tesla Model S vehicle is the only electric car manufactured by Tesla Motors Inc (NASDAQ:TSLA). The vehicle costs $70,000, and received the highest rating from Consumer Reports in July. The company shipped 5, 150 Model S vehicles in the second quarter, higher than its target of 4,500 units.

Tesla Motors Inc (NASDAQ:TSLA) previously stated that it will accelerate production of its Model X vehicle and the right-hand drive version of the Model S in the second half of the current fiscal year. The company is expected to roll out its Model X vehicle next year.

Last month, analysts at Deutsche Bank projected that Tesla Motors Inc (NASDAQ:TSLA) has the ability to close the gap between traditional cars and electric cars with its Gen III vehicle. The analysts estimated that the electric car manufacturer will be able to maintain a gross margin of 25%, and needs to gain 5% market share or sell 200,000 Model S and Model X units achieve an average gross margin of 28%.

A majority of investors believe that the electric cars produced by Tesla Motors Inc (NASDAQ:TSLA) will become more popular once the Model S and Model X becomes increasingly available in the market.