Craig Irwin of Wedbush Securities was involved in a little bit of a furor on Tuesday. The analyst upgraded Tesla Motors Inc (NASDAQ:TSLA) to Outperform from Neutral. The upgrade may have been one of the major factors behind yesterday’s large increase in the value of Tesla. Shares of the car company soared after the upgrade.

Tesla Motors

Irwin took to CNBC on Tuesday to explain his decision. He said that the biggest factors for his upgrade were the strength of demand for Tesla Motors Inc (NASDAQ:TSLA), and the company’s cost structure. Irwin identifies his background as being in battery technology and says that Tesla is particularly strong on that front.

Tesla cost structure, demand boom

Irwin said that a survey done by Wedbush indicated that there is large demand for Tesla Motors Inc (NASDAQ:TSLA), and those enthusiastic about the company’s cars would pay a premium price in order to own one. According to the analyst, demand for Tesla vehicles is higher than he previously thought, and that will play into large growth in the coming years.

The Generation 3 Tesla, which might be called the Tesla Model E, will have higher demand than Wedbush had previously worked into his model, according to the results of the survey. Of the 892 people questioned, 20 percent said they would definitely consider driving an electric car, and 19 percent said they would be willing to pay a $5,000 premium for a 90 percent increase in fuel economy.

Tesla Motors Inc (NASDAQ:TSLA) has had a huge effect on the automobile industry in the United States, and it shows clearly in the report from Irwin. The battery in the Tesla Model S is one of its most expensive components, but it’s not that much of a disadvantage. “I’ve not seen a competitor that has a cost structure on their battery that will approach what Tesla has,” Irwin told CNBC.

Tesla bubble?

The recent movements in Tesla Motors Inc (NASDAQ:TSLA) stock have led some to call an end to a bubble in the value of the firm. The stock has dropped more than 5 percent on more than one day in the last month, but it has recovered.

There appears to be more support than originally thought for Tesla Motors Inc (NASDAQ:TSLA) stock. The Wedbush report helped increase the firm’s value yesterday.

See full Tesla/CNBC video below