Tesla stock hasn't closed above $700 since May. Nicolas Asfouri/AFP via Getty Images Tesla stock looks like it is breaking out, with a hefty gain despite a lack of substantial news. The likeliest reason is developments in China .

Shares have been on a tear. Last week, despite a 2% decline after the electric-car company reported its earnings on Tuesday, Tesla (ticker: TSLA) shares rose 6.8% from $643.38, closing the week at $687.20.

The results were better than expected, with the company setting new records for operating profit and bottom-line income, so that news may have helped the stock even if the positive reaction was delayed. News from Ford Motor (F) may have helped Tesla stock even more.

Wednesday evening, Ford raised its forecast for operating profits for the full year—a sign that the shortage of semiconductors that constrained global auto production in the first half of 2021 is abating.

But that was all last week’s news, and Tesla shares were up another 5% on Monday. The S&P 500 and Dow Jones Industrial Average were up 0.5% and 0.6%, respectively.

Investors may be feeling bullish about China’s electric-vehicle market. NIO (NIO), XPeng (XPEV) and Li Auto (LI) all reported their July deliveries recently. All were at about 8,000 units for the month, but XPeng and Li reported records, NIO was just short of its monthly record.

Those numbers are another sign that Chinese EV demand is hot. And China is the world’s largest market for new cars.

XPeng shares were up 7.2% in early trading, while Li stock rose 4.4%. NIO shares were up 3.9%.

Optimism about Tesla’s driver-assistance software might also be adding to the rally. Tesla recently released new versions of its autonomous-driving software. Now, videos are popping up on Twitter (TWTR) and YouTube showing Tesla vehicles driving themselves successfully.

The videos, of course, are only a sampling. And Tesla’s software still requires drivers to be engaged at all times. True self-driving cars are still down the road.

Tesla stock closed 2020 at $705.67. At current levels of around $720, the shares are up about 2% year to date. Closing above $700 would be a good sign for the stock. Shares haven’t closed above $700 since May, when investors were worrying about the chip shortage and the pace of growth in China’s EV industry.

Write to Al Root at [email protected]