Tesla Motors Inc (NASDAQ:TSLA) Model S, continuing its growth story, grabbed 8.4 percent of the United States luxury automotive market, says a report from Electrification Coalition, published last week. The news continues the dream run after Tesla’s stock surged 280 percent since the start of 2013, and the company listed its first quarterly profit in 2013.

Tesla

Tesla outperforming rivals

For the first quarter of 2013, Model S outperformed Audi AG(ETR:NSU) A8, BMW 7 series and Mercedes S class sales. An interesting fact is that Tesla is a new automaker and its Model S has been in the market for only the previous 14 months compared to BMW, which has been selling its 7 series since 1977, and Audi launched A8 back in 1994.

PEV market expanding

Tesla Motors Inc (NASDAQ:TSLA)’s continued success is partly because of a big market for plug-in electric vehicles, or PEVs, in the United States, and also the automobile market is recovering, says a report from Motley Fool by Chris Neiger. The luxury car market in the United States showed sign of recovery first in 2011 when sales for BMW and Mercedes increased. The PEV market in the United States recorded sales of 110,000 vehicles since the start of 2011 including cars from Tesla, General Motors Company (NYSE:GM), Nissan Motor Co., Ltd. (OTCMKTS:NSANY) (TYO:7201), Toyota Motor Corporation (NYSE:TM) (TYO:7203) and others.

PEV sales recorded significant growth in their initial two years compared to hybrid vehicles in the first two years of their launch, a fact that surely favors Tesla’s growth.

Will Tesla be able to bring down battery cost?

CEO Elon Musk aims at introducing a $30,000 car in 2016, and the company will have to work on cutting the cost of batteries to achieve this number. This makes recent information from the Electrification Coalition so important. It is expected that cost of the battery will come down to almost half by 2020.

Bill Alpert of Barron’s does not believe that Tesla Motors Inc (NASDAQ:TSLA) can slash the cost of battery in time. He wrote, “Industries and governments around the world have spent billions on battery research, but few expect to trim electric-car battery costs by more than 20%-30% by the planned 2016 launch of Tesla’s car for the Everyman.”

More than 17,000 electric cars were sold between 2010 and 2011, and in 2012, the number surged to 52,000. In 2013, already 41,000 electronic cars have been sold.

Investors should keep a tab on the EV sales to observe latest consumer shifts towards electronic alternatives. Tesla Motors Inc (NASDAQ:TSLA) will surely get the benefits if EV sales surge and battery cost declines.