Updated from April 12 with additional information.

Tesla (TSLA - Get Report)  shares rose on Thursday morning even as CEO Elon Musk dismissed governance concerns raised by an investment group led by California State Teachers' Retirement System. The group had argued that Tesla's board is too dependent on Musk, and should add members without ties to the company's founder. 

Must suggested in a tweet on Wednesday afternoon that investors that the group should buy Ford (F - Get Report)  if they are shopping for shareholder governance.

@Reuters This investor group should buy Ford stock. Their governance is amazing ...

— Elon Musk (@elonmusk) April 12, 2017

Tesla stock were rising 0.7% to $298.85 on Thursday morning after opening lower.

Despite recent declines, Tesla's $48.4 billion market value has seemed to defy its cash burn and other practical business concerns. Tesla exceeds Ford's  (F - Get Report) $44.7 billion market cap, but is worth less than General Motors (GM - Get Report) , America's largest car company by market cap with a $51.1 billion valuation. 

Tesla topped GM's market cap early in the week, drawing attention to the company's valuation. As Musk has set ambitious goals for the launch of the mass-market Model 3 and recently purchased solar energy outfit Solar City, questions loom about Tesla's ability to hit its targets without raising more capital.  

As Tesla revs up for the debut of the Model 3, CalSTRS and other investors suggested that the company needs to dial back the influence of its founder by making its board more independent. The group wants two new directors elected who do not have ties to Musk, and for all directors to stand for election each year, instead of every three years in staggered fashion.

"Tesla has achieved phenomenal growth to date, but the company finds itself at a defining moment in its development," wrote the California State Teachers' Retirement System, the Office of New York City Comptroller Scott Stringer, Hermes Equity Ownership Services, Connecticut Retirement Plans & Trust Funds and CtW Investment Group in a letter on Monday to Tesla lead independent director Antonio J. Gracias. The investors did not disclose the size of their holdings, so it is difficult to tell how much influence they could have. Collectively, however, the groups manage $721 billion in assets, according to Bloomberg.

"The successful launch of the Model 3 is widely viewed as a critical milestone in helping the company reach profitability by bringing electric vehicles to the masses," the group added. "With free cash flow hitting an all-time low of negative $1 billion in Q4 2016, Tesla's long promised goal of achieving sustained positive free cash flow seems far off."

Tesla had already stated that it would add independent directors, Musk tweeted on Wednesday afternoon.

Still, Tesla and Musk may get a free pass by some measures.

"In many ways, [Tesla] seems to play by its own rules," Piper Jaffray analyst Alex Potter wrote in a Monday note, as he upgraded the stock from neutral to overweight and boosted his target from $223 per share to $368 per share. "The company burns through cash at a rate that better-established companies would likely be crucified for -- especially considering TSLA's rickety balance sheet and penchant for raising equity."

Shares of Tesla are up more than 40% so far this year. 

The elite brand electric automaker faces a major test this year as it attempts to go mass market with the Model 3, which will have a starting price around $35,000. The company expects to churn out 5,000 cars per week by the end of the year and to produce 500,000 in 2018, numbers that have met with some skepticism on Wall Street. 

Tesla's ambitions may not be as grand as rumors in the press suggest, however. The company on Monday, for example, denied a report that is building a plant in Guandong, China. "Tesla is deeply committed to the Chinese market, however the rumors that we plan to open a factory in Guangdong are not true," a Tesla spokesperson said via email. 

Piper's Potter, who bought a Model S months ago, values Tesla in between chipmaker Nvidia (NVDA - Get Report) , which has a strong presence in the evolving smart car market, and a group of peers with a role in automotive components and technology such as Delphi (DLPH - Get Report) , Amphenol (APH - Get Report) and Sensata (ST - Get Report) . While Nvidia trades at 20 times projected 2017 Ebita and the market values the peer group at 12.2 times, Potter assigns Tesla a multiple of 15 times Ebitda.

Even if Tesla misses its projections, Potter suggests customers and even investors will "withhold judgement."

One possible reason is the lack of successful challengers. "Companies with Silicon Valley DNA (e.g., Apple (AAPL - Get Report) , Google (GOOGL - Get Report) , etc.) have begun backing away from their plans to build cars -- so that leaves incumbent auto makers, most of which lack the tools needed for challenging Tesla," Potter wrote. "This isn't necessarily about technical capabilities -- cash-rich companies like GM (GM - Get Report) or Ford (F - Get Report) can always buy talent. Instead, institutional inertia and cultural incompatibility pose the most significant challenges for incumbent auto makers."

Only about 3% of those who interview at Tesla get jobs there, Potter notes that it's easier to get into Stanford. "In the minds of its customers, employees, and shareholders, Tesla isn't just another company," Potter wrote.

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