This is a big quarter for Tesla Inc (NASDAQ:TSLA). The company is in the midst of launching Tesla 3 — a more affordable, mass-market electric vehicle that TSLA stock holders hope the company can put out on scale with traditional automakers.

Tesla is almost assured to accelerate its market share growth in EVs with the Tesla 3. Its affordability has already attracted hundreds of thousands of consumers who did not have the funds to buy the Tesla S sedan or Tesla X SUV.

Scaling up unit sales of EVs is in Tesla’s interest, and that goes beyond the basic “selling more is good.” See, Tesla also has a Supercharger charging network that is more cost-effective to operate as more vehicles use it.

If the Model 3 were the only consideration investors had to make concerning TSLA stock, it’d be difficult not to be bullish. However, the world is not a bubble, and there are a few other factors to consider.

Muted Competition

The EV market is expanding, and rapidly.

BMW and Mercedes-Benz, along with General Motors Company (NYSE:GM) and its Chevy Volt, are just a few companies vying for market share. Hyundai just announced on Aug. 17 that its premium car strategy centers around electric cars. Before it made that news release, the Korean firm had bet on fuel cell technology. That’s changing; in 2021, its premium Genesis brand will be an EV with a range of 500 kilometers.

I believe Hyundai’s entrance into the market is still a risk factor for Tesla, even if that EV Genesis release is years away.

It’s also one of many examples of how automobile companies are recognizing the market potential for EVs. Hyundai is one of the top car companies in the world. Its manufacturing allows for mass-producing cars at low costs. By the time Hyundai launches a Genesis EV, Hyundai also could have a product that competes effectively against Tesla on the lower end.

Tesla’s early entry gives it an edge, though, and the innovative design and strong brand recognition provide a decent moat. Also, automaking is increasingly becoming a tech arms race, and there too, Elon Musk & Co. seem to have the edge. Teslas are at the forefront of many technological add-ons, not least of which includes its evolving Autopilot autonomous driving capability.

Debt Raise

Tesla recently $1.8 billion sold eight-year unsecured bonds to fund the growth in its business. The ramp-up in production of the Model 3 is going to need financial support. The aim is that as the company makes more money from getting its mass-market EV up to scale, the boost in cash flow will allow Tesla to pay off the debt.

While Tesla must raise funds for all its capital expenditures, it’s straining the balance sheet, though it’s not a severe worry for shareholders. Tesla’s debt-to-equity sits around 1.6, making insolvency very unlikely in the near-term.

And demand for the bond sale was strong — indeed, it originally was slated for a $1.5 billion round — indicating investors are supportive of the company’s long-term aims. And why not? The Model 3 release will boost brand awareness, which likely will result in even more customers.

Heightened Bullishness

Analyst price-target hikes are another risk factor. Analysts are often late to making the bullish case. But Tesla’s large moat and strong prospects ahead — thanks to the Model 3 release — suggest the market

The price target hikes from Analysts is another risk factor for Tesla shareholders. Analysts are often late making their bullish case, and right now, Wall Street is underestimating TSLA stock, posting an average price target of $317 versus current prices around $350. But Tesla’s large moat and strong prospects ahead thanks to the Tesla 3 release suggest the pros will eventually have to change their tune, especially if the stock continues to rise.

Not everyone believes Tesla has an infallible competitive edge in the EV marketplace, however, nor do they believe Tesla shares can continue this run.

Some 27% of TSLA’s float is sold short currently, with many of those bears betting the stock is simply too expensive. They’re likely also worried about future cash flow covering Tesla’s mounting debt. Other worries include cancellations of the Model 3, and the potential for more once Tesla runs out of the lucrative tax credits that make its vehicles’ prices more digestible.

Bottom Line on TSLA Stock

Tesla’s Model 3 release is a positive development until it isn’t. If Tesla runs into production snags, then we have a different story on our hands. But for now, the path is clear — as customers take delivery of their Model 3s, that will act as a moving showroom to attract other consumers. Production will slowly ramp up, but it’s better for Tesla to release a quality product correctly rather than rush it and face the issues it has faced in the past.

Tesla stock is far from bulletproof, but for now, the longs have the board.

As of this writing, Chris Lau did not hold a position in any of the aforementioned securities.