Tesla is on a tear lately

Tesla elon muskREUTERS/Rebecca CookSo you like us again!

The tail end of 2014 and the first few months of 2015 were not kind to Tesla’s stock.

But since early April and the lead-up to the announcement of the company’s home-battery product, the Powerwall, shares have rallied, up almost 25%.

The low was March 27: $US185. Shares closed at $US249 on Wednesday. Things started to take off April 2, when the stock was at $US191.

Since then, it’s crossed $US250. That’s lower than Tesla’s 2014 peak of $US291. But it’s clearly a big improvement of where the stock was at the start of the year.

So what’s fuelling the rally?

The new battery business is part of it, as is Tesla’s continued confidence, expressed to analysts, that it can start to deliver its new Model X SUV by the third quarter. Progress in getting states to allow Tesla to bypass the dealer network and sell cars directly to consumers is also helping to boost enthusiasm. Construction of the company’s $US5-billion Gigafactory battery plant in Nevada is proceeding apace. And Tesla is going to begin selling used cars, potentially expanding it owner base and enriching its customer pipeline.

But the bottom line is that we’re still talking about company selling one car, the Model S sedan, and building it at one factory. The car sells for around $US100,000. So on the fundamentals, it’s hard to see how this most recent runup in share prices is anything other than a surge of positive, even hopeful, sentiment, on the heels of a lot of negative opinion.

In that context, the pressure is really on Tesla and CEO Elon Musk to start delivering the Model X on time — and to satisfy the company’s pledge to sell 55,000 vehicles in 2015. Genuine good news would vindicate the recent rally.

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