What happened

The stock of Tesla (NASDAQ:TSLA) popped on Wednesday, jumping as much as 10.3%. At 2:50 p.m. EDT, however, the electric-car maker's shares were up 6.9%.

The growth stock's rise comes as shares continue to rebound from a massive sell-off due to the COVID-19 pandemic. Bullishness toward the stock on Wednesday likely reflects a combination of optimism in the overall market and reports that Tesla may be expanding its production capacity at its Shanghai factory.

Tesla vehicles outside of the company's factory in Fremont, California

The Tesla factory in Fremont, California. Image source: The Motley Fool.

So what

As of this writing, the S&P 500 was up 3.5% on Wednesday. The broader market rose as investors cheered a $2 trillion stimulus bill agreed upon by Congress last night. This bump to the overall stock market likely played a key role in Tesla's rise.

Also likely helping fuel the stock's jump, DigiTimes said on Wednesday that Tesla may be planning to expand production capacity at its Shanghai factory, including possibly starting the Model Y production at the factory ahead of schedule. DigiTimes cited "media reports from China" as its source.

Now what

With vehicle manufacturing at Tesla's factory in the U.S. currently shut down, investors are likely concerned about the automaker's ability to hit its guidance for more than 500,000 vehicle deliveries this year. Assuming demand is sufficient to keep up with increased production in China, higher production capacity at the factory could help offset the damage of temporarily paused production in the U.S. due to the coronavirus. But any investments in increased production capacity today will take time to translate to increased vehicle output from the factory.