Tesla Motors Inc (NASDAQ:TSLA) stock surged 16.5%, which is its biggest one day gain in near four months after German officials cleared the Model S of any defects, and two analysts stated that the recent fire would not take a toll on the business.Tesla Motors TSLA

Tesla stock soars owing to success of Model S

In the United States, the Model S is being investigated. The German agency has almost similar powers to that of U.S. National Highway Traffic Safety Administration, and can order a recall in case the automobile fails the test.

“No manufacturer-related defects could be found,” the Palo Alto, Calif.-based company said, citing documents from the agency. “Therefore, no further measures under the German Product Safety Act are deemed necessary.”

Among automobile stocks all over the world, Tesla Motors Inc (NASDAQ:TSLA) soared highest this year fueled by the sales of the innovative Model S, which is priced from $70,000 to more than $100,000.

Earnings a bit disappointing

Shares of the electronic vehicle maker dropped last month as the company posted third quarter results which were below some of the analysts’ expectations along with three back-to-back accidents.

In the third quarter, Tesla Motors Inc (NASDAQ:TSLA) posted earnings per share of 12 cents on $603 million in revenue, and delivered around 5,500 Model S units. Gross margin of the company came in at 21% excluding Zero Emission Vehicle (ZEV) credits.

Tesla said it expects to “deliver slightly fewer than 6,000 Model S vehicles in Q4, which increases our total expected deliveries to 21,500 vehicles worldwide for 2013.”

Analysts positive on Tesla

According to Adam Jonas, analyst at Morgan Stanley New York, though the negative news about the Model S has the potential to hurt the stock’s momentum, it will not affect the business substantially.

Jonas added that Tesla Motors Inc (NASDAQ:TSLA) shares have moved from being 20% overvalued to 20% undervalued in just two months, due to its progress and cult-like behavior of which Jim Cramer has commented on many times. Analysts believe that the stock is trading in an unstable region because the company has announced that it will deliver just under 6000 Model S vehicles as the company would fall short on supply.

After the German authorities’ decision, analyst Elaine Kwei at Jefferies said that NHTSA decision would also be in Tesla’s favor. The analyst added that the German decision puts greater confidence in the expectations that NHTSA would also clear Tesla, which would take the stock higher. Kwei lowered the price target on Tesla to $190 from $210.