By Silicon Valley / San Jose Business Journal

Tesla Motors Inc. stock shot up by as much as 8 percent on Monday, fueled by an analyst projection that it could hit $50 a share within three years.

"We continue to believe the majority of the investment community (and the majority of the automotive industry) is substantially underrating Tesla's potential," JP Morgan analyst Himanshu Patel wrote, projecting the shares could trade between $40 and $50 a share in the next few years as it expands its product line.

Tesla shares traded as high as $24.81 Monday. It has traded as high as $36.42 late last year and as low as $14.98 in July shortly after it went public.

The Palo Alto electric car maker (NASDAQ:TSLA) to date has only had the $109,000 Roadster for sale but plans to launch its Model S. sedan next year followed by a crossover vehicle dubbed "Model X."

Patel said that the company seems to be on schedule and could achieve operating margins to rival those of German luxury car makers of as much as 9 percent.

Copyright 2011 American City Business Journals

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