As if Tesla's (NASDAQ:TSLA) 280% stock price increase since the beginning of 2013 or becoming profitable in Q1 of this year wasn't enough, the Electrification Coalition released a report last week stating that Tesla's Model S made up 8.4% of the U.S. luxury automotive market in the first six months of the year.

In the first quarter of this, year Model S sales outpaced Audi A8, BMW 7-series and Mercedes S Class sales. But what's really striking about the comparison is that Tesla is a young car company and its Model S has been selling for only about 14 months, while BMW has sold its 7-series since 1977 and Audi's flagship A8 launched back in 1994.

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Tesla Model S. Source: Tesla.

Part of Tesla's success is due to the acceptance of plug-in electric vehicles, or PEVs, among U.S. consumers and an overall bounce back in automotive sales. We first saw evidence that the U.S. luxury auto market was coming back in 2011, with spikes in sales from BMW and Mercedes. Meanwhile, the PEV business has seen more than 110,000 U.S. vehicle sales since the beginning of 2011 -- including cars from Tesla, General MotorsNissan, Toyota, and others.

Topping off Tesla's solid PEV and luxury position is that PEV sales have been twice as high in their first two years than hybrid vehicles were in the first two years after that market's initial launch -- a trend that could certainly continue to benefit Tesla.

But Tesla has bigger aspirations than just tackling the luxury or PEV market. Tesla CEO Elon Musk has been very vocal about introducing a $30,000 car for the masses by 2016. To achieve that goal, the company will need to significantly decrease the cost of its batteries. That's why the latest information form the Electrification Coalition is so important. The group expects battery costs to drop by almost half by 2020. 

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Model S interior. Source: Tesla.

But not everyone is convinced Tesla can lower battery costs in time -- including Bill Alpert of Barron's. "Industries and governments around the world have spent billions on battery research, but few expect to trim electric-car battery costs by more than 20%-30% by the planned 2016 launch of Tesla's car for the Everyman," he wrote in an article last month.

But if battery costs do drop by half by 2020, then it's not out of the realm of possibility for them to fall by 20% to 30% over the next three or four years. GM and Nissan are researching how they can reduce EV battery costs by selling used batteries after their automotive lifecycle is finished. Used EV batteries can still have 70% of their initial capacity after about 10 years, and the two car companies are looking into ways to sell those batteries to energy companies. 

But the best way to lower battery costs is for auto consumers to adopt EVs and scale down the overall cost of battery prices in the process. So far, things have been moving in the right direction for that to happen. From 2010 to 2011, just over 17,000 electric vehicles were sold. In 2012, that number jumped to more than 52,000. Now, just seven months into 2013, the EV auto market has already sold almost 41,000 electric vehicles. The models of EV cars on the market also jumped from just three in 2010-2011 to 13 right now. Those stats have contributed to a drop in EV battery prices by about 40% from 2010 to 2012.

Investors would be wise to keep an eye on EV sales to see whether consumers continue to turn toward electric alternatives. As EV sales go up and battery costs go down, Tesla will be in a much better position to meet its mass-market goals.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Tesla Motors . Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.