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Here’s Why Investors Are Betting on Tesla’s Tech Prowess

With a market capitalization of $20 billion, shareholders are valuing Tesla (NASDAQ:TSLA) more like a technology company than an automaker.

There is some reason for their enthusiasm. Sales have been great in California, the company’s home base and the largest U.S auto market. The California New Car Dealers Association on Monday reported sales results for the first six months of 2013, and Tesla’s Model S was the third-best selling luxury sedan after Daimler’s (DDAIF.PK) Mercedes-Benz E Class and BMW’s 5 Series models. In fact, this particular piece of news sent shares of the electric vehicle manufacturer to a new all-time high of $173. When the company’s stock price surged past $172.75 during that rally, its market capitalization hit $20 billion.
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“Justified or not, the expectations for this company are now very high,” Baum & Associates automobile analyst Alan Baum told Bloomberg. He likened the electric vehicle manufacturer to Apple (NASDAQ:AAPL), saying the company has “managed to cross the automotive and technology fields to become this hot commodity.”

Especially compared with 2012, when the company was missing production target after production target, 2013 has been a banner year for Tesla. The Model S has been hit with several accolades: Motor Trend declared the electric vehicle its 2013 Car of the Year, Consumer Reports gave the vehicle a near-perfect score of 99 out of 100, and the National Highway Traffic Safety Administration gave Model S a 5-star crash safety rating this month.

These awards have contributed to Tesla’s standing in both the automotive world and the technology world, and the growing reputation of the Model S has no doubt boosted its sales. That Tesla’s luxury electric vehicle — the Model S Sedan — has become popular with the affluent and the environmentally conscious is clear from the numbers


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