Shares of electric car maker Tesla Motors (TSLA) hit a new high of $199 a share on Monday after China’s Finance Ministry announced higher than expected subsidies for electric cars bought there. The subsidies, originally set to be phased out by 2015, will be replaced with a new regime that will take effect after that date “to preserve policy continuity,” the ministry said in a statement on its website.
As part of the Chinese government plans to tackle pollution, subsidies for 2014 will be cut by 5%, instead of the previously announced 10%, and decreased by 10% in 2015, instead of 20%, the statement said.
Higher than expected subsidies from the Chinese government will certainly benefit Tesla Motors, which sees China as a key driver of its global auto sales growth. Tesla made its debut in the world’s largest auto market this month with its battery-powered Model S at a lower-than-expected price of 734,000 yuan ($121,000), almost the same as in the U.S., excluding taxes and transport costs.
Up more than 400% on year-over-year basis, TSLA has been one of the hottest momo stocks of the last year. The American electric car manufacturer closed at $120 a share on Nov. 26, before beginning a comeback. The new 52-week high of $199.30 a share printed today is around 12x what the initial public offering price was back in June 2010, $17 a share. As of this writing, Tesla’s market cap is $24.10 billion.
Tesla is due to report fourth quarter results Feb. 19. The report will be for the fiscal quarter ending December 2013.