Tesla Inc. is smashing through records as its impending addition to the S&P 500 Index has sparked a buying frenzy among investors, pushing the company’s market valuation over the US$500 billion mark for the first time on Tuesday.

Shares of the electric vehicle company have soared this year, rising nearly 550 per cent, with gains accelerating over the past week after S&P Dow Jones Indices last Monday said Tesla will be added to the benchmark. The stock surge helped co-founder Elon Musk add US$100.3 billion to his net worth this year and overtake Bill Gates to become the world’s second-richest person.

Tesla shares rose as much as 4.1 per cent in New York in early trading, touching an all-time high of US$543.17, and pushing its market capitalization to over $506 billion. Crossing the treshold valuation brings true a prediction from Musk, who is said to have made it 18 months ago in a call with investors.

With Tesla set to join the index on Dec. 21, money managers and investors who closely track the S&P 500 will now have to buy the stock in order to accurately mirror the gauge. Goldman Sachs Group Inc. has said Tesla’s inclusion could result in US$8 billion of demand from active U.S. large-cap mutual funds.

Tesla’s ascension and entrance into the group of blue-chip investments is also good news for the broader sector. Nio Inc., Workhorse Group Inc., Nikola Corp., Lordstown Motors Corp., XPeng Inc., Li Auto Inc. and Ayro Inc. have also rallied and some are now trading at new record highs.

Electric-vehicle makers and other related companies across the world have also enjoyed frenzied buying on optimism the auto sector will be dominated by electric-powered cars in the decades ahead. That combined with high valuations for Tesla is pushing investors to lesser known names that can benefit from the sector’s growth opportunities, but with a smaller share price.