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Tesla electric car becoming a must-buy for the wealthy

A Tesla Model S electric car is on display at a Tesla store in a shopping mall in La Jolla, Calif., on Sept. 6.
A Model S electric car at a Tesla showroom in La Jolla, Calif., Sept. 6, 2013. Tesla cars are the most registered new car in 8 of the country's 25 richest zip codes.MIKE BLAKE / Reuters

Not surprisingly, the Tesla Model S battery-electric car that sells for more than $100,000 has become a must-buy for the affluent motoring set. 

Data tracking service Edmunds reports that the Model S is now the most-registered new car in eight of the nation’s 25 wealthiest neighborhoods tracked by zip code. 

The bulk of those communities are in California and it appears that the Tesla battery car has become the latest status symbol among the state’s rich trend-setters. It is a more fitting green fashion statement than the more plebian Toyota Prius that gained fame a few years back when actor Leonardo DiCaprio arrived in one for the Academy Awards ceremony.

"Influential people set trends while the mainstream aspires to follow," writes Edmunds analyst Jessica Caldwell. "With the proclivity of tech geek being chic, the Silicon Valley area will set trends faster than traditional high-income markets like New York."

In Atherton, California, outside San Francisco, where the average home goes for $6.7 million, the Tesla Model S now commands a 15-percent share of new vehicle registrations. In nearby Los Altos Hills, it’s 11 percent.

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That’s not to say the Model S has no appeal outside the Left Coast. It is gaining ground in the Northeast and, to a lesser degree, in other parts of the country – especially as Tesla expands its dealer network and sets up more of its high-speed superchargers, with the goal of putting at least one of these fast-charge facilities within 70 to 100 miles of every possible American buyer.

In fact, demand is growing outside North America, notably in Germany, Norway and even China, where a news report this week notes that the first customer paid $410,000 for one of the sleek battery sedans. That’s a significant mark-up for a vehicle that starts at $70,000 in the States, where even a fully-loaded Tesla Model S tops out around $104,000.

That, of course, is on top of the work that may be needed to set up the home charging system that can handle the vehicle’s big battery. When charging, the longest-range, 85 kilowatt-hour pack can require nearly as much energy as the typical home uses in blue-collar communities. The wiring and hardware can add thousands to a Model S price tag.

Nonetheless, demand has been strong enough that the Model S has been selling at nearly the same rate as the Nissan Leaf at barely a third the price tag.

Part of the secret appears to be that demand for the Model S has been buoyed as much by image as by any desire to reduce fuel costs – a factor that surveys show motivates buyers of more mainstream electric vehicles.

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With gas prices tumbling at the pump, lower-priced models, such as the Chevrolet Volt sales have been tumbling in recent months, with the plug-in hybrid off nearly a third in October compared to year-earlier numbers.

But while wealthy buyers may be propping up demand for the Tesla, that doesn’t mean the Silicon Valley start-up doesn’t have its problems. Two battery fires and a series of doubting reviews by investment analysts has hit the automaker hard. After experiencing a five-fold run-up in its stock price since the beginning of the year, Tesla shares have fallen sharply since the beginning of October, losing about $4.1 billion in market capitalization.

But that seems to have fazed the company only slightly. It just inked a revised contract with battery supplier Panasonic that should permit it to substantially boost production. Meanwhile, Daimler has indicated its desire to expand earlier ties to Tesla as the German parent of Mercedes-Benz boosts its own presence in the battery-car market.