Tesla Model S
Tesla Model S Tesla

Shares of automaker Tesla Motors, Inc. (NASDAQ:TSLA) could touch $42 in the next 12 months, driven by demand for its Model S electric car. Much of Tesla's future lies on the success of the Model S, its first sedan, which it hopes to start delivering to customers next year.

The base version of Model S, with a 40-kilowatt-hour battery which will give 160 miles per charge, comes at $49,900 after 7,500 federal tax credit.

In 2012, Model S pre-orders will be the primary driver of stock appreciation, Pacific-Crest Securities analyst Erik Olbeter has written in a note to clients.

Olbeter expects 13,000 pre-orders by the end of first half of 2012. Pre-orders will be driven by new store openings, beta releases to the stores and test drives available starting in spring 2012. The test drive availability is critical to maintaining backlog momentum in the second quarter of 2012 and is an incremental positive to the story.

For next the 12 months, nothing more is necessary to make Tesla work. If the Model S starts rolling in mid-2012 and the backlog of initial orders is filled, TSLA is likely to be worth at least $42, says Olbeter.

However, the analyst has warned that Tesla's third-party OEM partners could fail miserably in selling EVs with Tesla's powertrain. But for Tesla investors, all of the third-party sales do not dent a business model that will sink or swim based on Tesla Model S and Model X sales.

Olbeter has justified his outperform rating on Tesla stock saying that Tesla is not selling an electric vehicle, but it is selling a luxury automobile with an electric drivetrain.

This is more than just semantics. It reflects the view that Tesla's products appeal to a broader set of customers than just environmentalists, who have not stepped up as expected to buy the Nissan Leaf or Chevy Volt, he said.

Instead of selling a $12,000 car with a $20,000 battery, which very few view favorably, Tesla is selling a car that stands on its own against its peers in the luxury auto market.

What Tesla's auto loses in driving range, it makes up in performance, and we believe that its infotainment system will set the standard by which other luxury cars are measured. In Asia, we expect Tesla to be one of the prime luxury statement purchases of 2013, the analyst has said.

Olbeter says Tesla Motors' cutting-edge product lineup, low-cost battery technology/philosophy, elite brand and strong engineering skills position the company well for an on-time product launch and great initial sales.

The analyst forecasts that Tesla will have 13,000 Model S pre-orders by the time the first Model S ships in July 2013. If pre-orders momentum accelerates in 2012 and the production schedule remains intact, shares will climb higher in tandem with confidence in 2013 earnings power.

In addition, the analyst's checks suggest that Asian customer demand will be high for the fully loaded Model S. Tesla plans to ship the Model S to international customers at the beginning of 2013.

Shares of Tesla Motors closed Tuesday's regular trading session at $27.90 on NASDAQ.