Tesla admitted earlier this week that it was struggling to make enough of its advanced batteries that enable its cars to travel more than 300 miles on a single charge. Influential analysts then raised doubts about Musk's ability to deliver on his lofty promises. The company's stock has plummeted 16 percent this week, including 6 percent Thursday, forcing the Palo Alto, Calif., company to surrender its crown as America's most valuable automaker.
Anticipation surrounding the $35,000 Model 3 has been unlike almost any other in automotive history. A staggering number of consumers -- more than 370,000, according to Tesla's latest public figures -- signed up for the car last year before they could even kick its tires or learn its exact price or specifications. More than a year after Musk announced the Model 3, the first 30 units will be handed over to customers at a ceremony on July 28.
Many in the industry took the intense interest as a sign that consumers were finally willing to embrace more environmentally friendly vehicles. Traditional manufacturers accelerated their plans for electric cars.
This week, Volvo became the first traditional automaker to shift decisively away from the internal combustion engine, announcing that by 2019 it would use only electric or hybrid motors in its vehicles. French officials said Thursday they hope to end the sale of gasoline and diesel vehicles altogether in the country by 2040.
The momentum toward electric vehicles is unlikely to fizzle, even if Tesla runs into problems with its Model 3, several analysts said. The question for Musk is whether his company will continue to lead the movement it helped spark.
"What Tesla has done is quite remarkable, and it has forced other automakers to get into the game," said Michelle Krebs, executive analyst at Autotrader. "But the electric vehicle market was one that Tesla largely had to itself, and now it's going to face further competition."
Tesla declined to comment.
For Musk, the Model 3 represents the apex of a vision he laid out in 2006. In a blog post he called Tesla's "secret master plan," the billionaire businessman outlined his hopes for a cheap, ubiquitous consumer vehicle that was powered solely by electricity. He would achieve the goal, he said, by first selling high-margin luxury vehicles and using the proceeds to fund research on the more affordable versions.
Musk made good on those promises, following up with the creation of a $109,000 Tesla sports car in 2008, the $75,000 Model S sedan in 2012 and the Model X, a crossover SUV, in 2015 for $82,500.
"For all of you who bought an S or an X, thank you for helping pay for the Model 3," Musk told an audience at an event to announce the no-frills sedan. "The Model 3 is happening because of you."
Musk's development plan matched his unconventional style, which drew inspiration from the glossy allure of Silicon Valley and its penchant for disrupting other businesses.
Tesla has injected the tech industry ethos into its cars by making standard what other automakers had barely attempted - for instance, using wireless software updates to add new user features and services to its cars. One of those additions, an advanced cruise control technology marketed as Autopilot, seemed to promise drivers a taste of a future where vehicles can drive themselves.
The few details that have been released about the Model 3 reflect this futuristic mindset; the car eschews a traditional driver interface in favor of a simple steering wheel and a tablet mounted horizontally on the dash.
By offering a high-tech, semi-exclusive glimpse of what transportation could become, Musk helped build a massive following for Tesla, with equally enormous expectations. Failure could mean ceding ground to other automakers with much larger scale and manufacturing experience.
Beyond a lack of batteries, Tesla told investors this week that it had delivered just 22,000 vehicles over the last three months, barely meeting estimates and coming in 3,000 units short of its delivery performance last quarter. Vehicle deliveries to consumers have become an important metric for analysts as they gauge the company's manufacturing capacity - a sign of its ability to keep pace with the market.
Musk has said he does not anticipate production problems with the Model 3. By the end of the year, Tesla will be producing 20,000 Model 3s every month, Musk tweeted Monday.
But some are more skeptical of Musk's claims.
"If the company is having trouble keeping up with battery demands for the Model S and Model X, how likely is a battery shortage for the high-volume Model 3?" said Karl Brauer, an analyst at Kelley Blue Book.
Battery bottlenecks could lead to delays in producing adequate numbers of Model 3s. That could be disastrous for Tesla's financial success, particularly if the company does not turn a profit on the Model 3, Brauer added.
The uncertainty over Tesla's readiness is reflected in the company's flunctuating stock price. Whether Tesla is a good investment hinges on the successful launch of the Model 3, according to Toni Sacconaghi, an analyst at Bernstein Research.
That so much of the company's future now depends on a single product underscores the pivotal moment now facing Musk and his company. Although Tesla may be poised to make automotive history, the speed at which the car industry is evolving threatens to leave any manufacturer who makes a major mistake at a distinct disadvantage.
Still, Musk has shown he is capable of learning and adapting. Several months after Tesla launched the Model X - another product plagued by production difficulties - Musk conceded that Tesla tried to pack too many fancy features into the vehicle.
"I think there was some hubris there with the X," he told investors on a conference call. "I'm not sure Tesla would make a car like this again."