This was the short squeeze that was begging to happen. Five guys owned 50% of the company, including the visionary founder, Elon Musk. Of the remaining float, 45% had been borrowed and sold short by hedge funds. All that was needed to ignite a rally was for someone to say ?Boo.?

That is exactly what Ben Bernanke has done with his non stop quantitative easing. A poorly researched hatchet job by the New York Times on the new all electric Tesla Model S-1 produced a flood of countervailing positive reviews extolling the many virtues of the revolutionary vehicle (click here for ?My Take on the Tesla Tiff?). The Times could not have delivered a more effective marketing campaign if you paid them millions.

Then the company announced its first profit in history. It sold 4,900 cars, versus an expected 4,500, one of which was to me. Some 70% were of the highest margin, 80 kWh, $80,000, 300-mile range version. This was on the heels of its first ever price increase. The Q1, 2013 net jumped to $11.9 million compared to an $89.9 million loss in the earlier quarter. It boosted its forecast of this year?s total production from 20,000 to 21,000 vehicles.

There is now a one-year waiting list for the least expensive $60,000 model. Cash is pouring in so fast that Tesla announced it would pay back its $465 million Department of Energy loan five years early. It is also talking to Google about adopting its driverless technology.

South African native, Elon Musk, is said to be the model on which the Iron Man character, Tony Stark, is based. His IPO late last year for SolarCity (SCTY) has also delivered a gangbusters performance, up 216%. Next on the calendar is taking Space X public, his heavy lift rocket company with a NASA contract potentially worth $1 billion. Since January, his personal fortune has tripled to $7 billion. This is truly the man with the golden touch.

The onslaught of good news triggered one of the sharpest and most furious short squeezes in stock market history. (TSLA) is now one of the top performing shares in the world this year, up a staggering 194%. Elon did get some outside help. Squeezing the largest short open interest stocks has been one of the most profitable trading strategies of 2013. Tesla is simply following on the heels of Blackberry (BBRY), Herbalife (HLF), and Netflix (NFLX), with similar results.

There is a cautionary tale in the Tesla action. Many of the players on the short side were global warming deniers who believed the whole thing was a leftist hoax. They thought Tesla, and all the other ?green? plays, like First Solar (FSLR), were the artificial creations of government subsidy that were all going to zero once the free money was withdrawn.

After I toured the Tesla factory and saw that he car was real, I warned some of these guys they were out of their mind. Whenever one filters investment decisions through a political prism, whatever that prism is, you might as well pile up your money and set fire to it.

At $97 a share, with a market capitalization of $12 billion, Tesla is now one of the world?s largest car companies, beating out Fiat (FIATY), which owns Chrysler and Peugeot (PEUGY). This is for a company that has only made 10,000 cars! Tesla now boasts a price earnings multiple of 70X, compared to 9.6X for Ford Motors (F).

What Tesla should do here is file for a secondary share offering and use the cash raised to retire debt. They can also sue the state of Texas, which has banned sales of the cars. They are trying to force the company to sell through a local, good ol? boy dealer network. Tesla only sells its cars online, another ground breaking and cost cutting aspect of their business model. So much for deregulation in the Lone Star State. I guess they are trying to keep us hooked on Texas Tea.

Even at the January price of $33, Tesla was expensive when compared to its peers. The investors were clearly taking a longer-term view. The demand for $60,000-$110,000 cars is limited. Next year it broadens out to the Model X, and all electric SUV, which should cost about the same.

Most on Wall Street have completely missed the main point of the whole Tesla story. The real play here is for a low end mass market vehicle, which Tesla will bring out in 4-5 years, using the manufacturing expertise and technology they developed with the earlier Roadster and the S-1.

Keep in mind that electric car battery ranges are doubling about every three years. Look no further than my own garage, where I jumped from an 80 mile range Nissan Leaf to the Tesla S-1 in just two years. I just sold my starter electric car to an ecstatic PhD in biochemistry at UC Berkeley for a bargain $18,500.

That means that by 2018, you will be able to buy a 300-mile range, five passenger Tesla hatchback for about $40,000. This will enable the company to grow into a major worldwide industry presence. That?s when the ?Big Three? becomes the ?Big Four?. That?s what a $97 share price is screaming at you.

Let me explain what else is in the works. By next year, there will be 20,000 Tesla?s in the San Francisco Bay Area. Our local utility, PG&E (PGE), currently sells us power for electric cars for 5 cents a kWh between midnight and 7:00 AM. By sometime in 2014, if you leave your car plugged in, it will then buy it back from you during the day at 40 cents a kWh!

With the backup supply of 20,000 1,000-pound Tesla lithium ion batteries, (PGE) might be able to take a few natural gas power plants offline (the last coal fired plant in California was closed about 10 years ago). Not only will the power for your car be free, your utility will pay you to drive it! The system is already undergoing beta testing at a utility in Delaware. Welcome to the future!

Last weekend, I drove to the local shopping mall to run some errands. There was a classic car show on, so there was no spare parking. I asked the show organizers if they were accepting late entries, just to get a parking space.

Both the fans and the other exhibitors were drawn to my S-1 like a magnet, mobbing the car and barraging me with questions. Some thought it was a joke, as there was no visible motor. I felt like Marty McFly bringing a car from Back to the Future. I popped out to run my errands. When I returned, I had won first prize and a blue ribbon.

There is one battery problem that I should write about here. Since the end of the ski season, my Toyota Highlander Hybrid has sat neglected in my driveway, accumulating pine needles and bird poop. Since I?m not driving it enough to recharge the conventional lead acid battery, it keeps going dead. The Auto Club has already been out to give me a jump-start three times, and they say next time, they are going to bill me.

I have written at length about Tesla since the inception of this letter five years ago. To read another recent piece with more details on the engineering and the specs, please click here. Expect to hear a lot more.

The Competition

First Prize for a Late Entry

I Could Have Sworn I Left the Engine There Yesterday

In Your Future