What happened

Shares of electric car company Tesla (TSLA -3.12%) surged higher on Monday. Shares were up about 5.7% as of 3:30 p.m. EDT.

The growth stock's gain was fueled both by a bullish day in the stock market and news that Tesla has reportedly entered into an agreement with Luminar Technologies (LAZR 1.50%) for testing and development of Luminar's laser-sensor technology.

A chart showing a stock price moving higher.

Image source: Getty Images.

So what

Highlighting why the overall market likely helped Tesla stock's gain on Monday, the Nasdaq Composite was up more than 1.6% as of this writing -- and many growth stocks like Tesla were up several percentage points or more.

Meanwhile, news that Tesla is reportedly open to testing the laser-sensor technologies for autonomous driving that CEO Elon Musk has previously heavily criticized may have investors more confident in the company's long-term self-driving technology roadmap.

Though Tesla stock is up today, it's still down about 14% year to date and 32% below its 52-week high.

Now what

Given the stock's enormous run-up last year and its recent sharp decline, there's likely plenty of volatility ahead for Tesla stock.

Investors, however, should remain focused on the company's underlying business. Though Tesla's sales are growing rapidly, the company is still heavily dependent on sales of zero-emission vehicle credits for much of its profitability. But management believes Tesla is on a path to eventually achieve industry-leading operating margins.