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Tesla Motors, Inc.’s (TSLA - Free Report) Model S was the third highest selling car in the luxury and sports-car segment in California in the first half of 2013, according to a report by the California New Car Dealers Association. The sales totaled 4,714 cars in the first six months of 2013.

Daimler AG’s (DDAIF - Free Report) Mercedes E-Class and Bayerische Motoren Werke AG’s BMW 5-Series occupied the first two spots. However, Tesla beat Toyota Motor Corporation’s (TM - Free Report) Lexus GS and Volkswagen AG’s (VLKAY - Free Report) Audi A6. This is good news for the company as electric cars still occupy a niche market segment.

Though Tesla has acquired a substantial market share for Model S through its impressive design and enhanced performance, it has a long way to go. Although the company sold 1,097 Model S cars in Jun 2013 compared with only 8 cars in Jun 2012, its market share in California remains negligible. This is partly because Tesla has only one model in the market, while competitors have multiple high-selling cars.

However, this problem will be solved to a certain extent once Tesla’s Model X hits the market next year. The company is also launching a right-hand version of Model S soon.

These launches are expected to boost Tesla’s market position. However, even Model S is rapidly gaining market share. Tesla delivered 5,150 Model S in the second quarter of 2013, which surpassed its projection of 4,500 deliveries.

Sales are expected to increase further once Model S becomes easily available in other parts of the world. Tesla is gradually working toward this goal. The company recently opened an assembly and distribution center in Netherlands, which will allow the automaker to transport parts anywhere in Europe within 12 hours. Tesla also opened reservations for Model S in China earlier this month.

Tesla’s share price reflects its rising demand. The stock gained 1.5% to close at $164.22 on Aug 26, when California New Car Dealers Association’s report was made public. Moreover, Tesla’s shares have recorded an astounding 385% gain since the beginning of 2013.

Tesla currently carries a Zacks Rank #2 (Buy).

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