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Tesla Rises to Highest Since IPO After Analyst Boosts Rating

Tesla Motors Inc., the electric car company led by entrepreneur Elon Musk, closed at its highest price since its June 2010 initial public offering after Wunderlich Securities Inc. upgraded the company.

Tesla gained 9.7 percent to $37.40 at the close in New York, after earlier reaching $38.09. Theodore O’Neil, an analyst with Wunderlich in New York, boosted his target price to $49 in addition to changing his rating.

“This is a company that is under a lot of attention because it’s involved with this nascent industry,” said Alan Baum, principal of Baum & Associates, a provider of auto-industry analysis in West Bloomfield, Michigan. “It doesn’t take much to move the stock one way or the other.”

Tesla, based in Palo Alto, California, is three months away from beginning shipments of its second battery-powered model, the Model S sedan. Sales of the last $109,000 Roadster sports cars, the company’s first model, are ending this year and Tesla in February unveiled the all-electric Model X sport-utility vehicle that goes on sale in late 2013.

Tesla’s surge contrasted with a 12 percent plunge for lithium-ion battery maker A123 Systems Inc. The Waltham, Massachusetts-based company said today it’s replacing defective battery packs and modules it supplies to customers, including Fisker Automotive Inc., and that the flaw caused a Fisker Karma to shut down in a Consumer Reports test.

A123 fell to $1.49 at the close in New York, the lowest closing price since its initial public offering in September 2009.

‘Everything Is Magnified’

Both Tesla and A123 are in “a segment of the industry where everything is magnified,” Baum said. “This is certainly a material issue for A123 and they are going to have to deal with it from an outside funding standpoint.”

Separately, Tesla said today in a U.S. regulatory filing that H.E. Ahmed Saif Al Darmaki resigned from its board, a position he’s held since September 2009. There’s no plan to name a replacement for Al Darmaki, and the company will operate with a seven-member board, led by Musk, Ricardo Reyes, a Tesla spokesman, said in a phone interview.

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