Shares of electric vehicle maker Tesla, Inc. ( TSLA ) advanced strongly in the premarket session on Thursday. The upside is in line with the buoyancy shown by the index futures, which are up sharply early Thursday.

Much of the optimism toward the stock could be due to the 50 basis point cut in the Fed funds rate, which serves as the benchmark for all the other interest rates such as mortgages, as well as credit cards and other loans.

The EV industry has been caught in a rut since 2022 as demand faltered amid customers reining in spending amid high interest rates and hot inflation. The Fed rate reduction is expected to bring some relief to consumers as it would lower their borrowing costs. Tesla CEO Elon Musk has on many occasions cribbed about the impact of higher rates on sales.

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The stock may also get a prop from evidence of continued strength for Tesla in China, which is one of its key markets. Weekly vehicle insurance data from China showed 15,600 insured registrations for Tesla vehicles in the week of Sept 9-15, CnEVPost reported, citing data from Li Auto, Inc. ( LI ) .

Commenting on the data, fund manager Gary Black said after 11 weeks into the quarter, with only two weeks left, Tesla’s China third-quarter registrations are on track for their best quarter ever. Quarter-to-date period, the number was up 20% year-over-year and 26% higher than in the first quarter, he added.

In premarket, Tesla shares soared 2.88% to $233.74, according to Benzinga Pro data.

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Image Courtesy Of Tesla