Why Tesla, Inc. Stock Soared 18% in January

By Daniel Sparks Markets Fool.com

What happened

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In January, shares of electric-car maker Tesla (NASDAQ: TSLA) extended their march higher, gaining 17.9%, according to data provided by S&P Global Market Intelligence. This comes on top of a 17.5% gain in December.

So what

Tesla stock's rise during January is likely due to a combination of Tesla CEO Elon Musk's growing access to President Trump, the National Highway Traffic Safety Administration's decision to exonerate Tesla's Autopilot after an investigation of the technology, and the company's ongoing preparation ahead of its important Model 3 launch later this year.

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In late January, Musk was not only seen meeting with the president, but he joined yet another forum of executives purposed to give the president advice on matters. This particular council was for manufacturing policy.

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Further, after a thorough analysis, the National Highway Traffic Safety Administration decided to close its investigation of Autopilot's performance in an fatal crash that occurred while the technology was activated. The auto safety organization not only concluded there were no defects, it also said the technology is reducing crashes by about 40% -- a figure Musk said in January he believes Tesla's recently released second-generation Autopilot sensors can get to 90%.

Finally, in January, Tesla continued to make key investments ahead of its planned Model 3 launch later this year. In particular, the company revealed that its Gigafactory has doubled in size since July and is on track to begin volume production of battery cells for Model 3 in the second quarter.

Now what

Going forward, investors should keep an eye on Tesla's timeline for its Model 3. Given the significant ramp in production the company anticipates it will achieve with the vehicle, the lower-cost, higher-volume electric vehicle is key to Tesla's growth story. Tesla will likely provide some key insight into the progress it's making on its Model 3 in the company's upcoming Feb. 22 fourth-quarter earnings release.

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Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.