While plenty of folks grab the popcorn to watch Tesla Inc.  (TSLA - Get Report) CEO Elon Musk trade jabs with journalists on Twitter, Tesla's Fremont factory just notched a couple of big production milestones for the Model 3.

In a companywide email Thursday morning, Elon Musk congratulated employees for achieving a production rate of 500 Model 3 sedans a day.

That's a run-rate of 3,500 cars a week at Tesla's current 24/7 pace - and around a 75% production jump from last month. And it comes just a week after Elon Musk told employees in another email that the company was on track to hit that 500 car a day target in May.

And Electrek reports another key milestone in the Model 3 production ramp at Fremont this week: Tesla has reportedly fixed its battery/chassis marriage bottleneck. That line at the factory achieved 32 units per hour, which, if sustained, would imply a run rate of 5,376 units per week.

Musk has repeatedly hammered home the fact that the Model 3 production line can only be as fast as its slowest piece; with a production goal of 5,000 Model 3 vehicles a week for the end of the quarter, there's a lot riding on Fremont's ability to keep pushing out more cars at a faster pace.

Meanwhile, the line is scheduled for a shutdown over this coming weekend for retooling to support higher production rates.

As the most heavily shorted stock on the market, there's no small number of folks on both sides of the Tesla trade watching the Model 3 ramp very closely.

And it's about to get very interesting.

I've said before that the emotional buy-in that short sellers are making in Tesla is creating a dangerous situation for what's already a crowded short-trade. Now, we're closing in on some major catalysts in the form of Model 3 production numbers and second half profitability that could see a record number of investors betting against Tesla at exactly the wrong time:

Source: S3 Partners
Source: S3 Partners

As recent data from S3 Partners' Ihor Dusaniwsky show, short sellers have consistently increased short bets as Model 3 production has increased, effectively upping the ante against Elon Musk as Tesla has ramped Model 3 shipments. As of this writing, nearly one in three shares of Tesla's float are being shorted, a level of bets for shares to drop that's nearly unprecedented in a stock with a market cap above $20 billion.

Tesla's latest production milestones are an indication that while Tesla and Musk have been delayed in reaching their target production numbers, they're on track to hit them.

Caveat venditor.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.