Goldman Sachs resumed coverage of Tesla Inc. with a sell rating and gave a $210 six-month price target for the company's shares.
Goldman Sachs analyst David Tamberrino said in a Sept. 4 research note that he believes Tesla will see "pressure to its lead in EVs [electric vehicles] as competition catches up."
"With regional mandates and tightening CO2 standards, both traditional and new entrants are expected to launch several EVs in the coming years — with a large crescendo in the early-to-mid 2020s," Tamberrino noted, adding that he sees the medium-to-longer term industry backdrop as "challenging for Tesla's products."
Tesla buyers will also start losing a $7,500 tax credit for electric vehicles in the first quarter of 2019. Tamberrino said that the loss of electric-vehicle tax incentives has typically corresponded with declines in demand for electric cars.
While the analyst wrote that those dynamics could "weigh on company gross margins and profitability," he said he still believes the company will be able to execute and hit its targets.
"Altogether, we remain bearish on the company's ability to execute, achieve its targeted production ramp/margins, and sustain [free cash flow] generation," the analyst wrote.
In August, Bloomberg News reported that Goldman Sachs suspended its coverage on Tesla stock and was acting as a financial adviser "in connection with a matter that is fundamental" to Tesla's valuation. That was after Tesla CEO Elon Musk tweeted that he was considering taking Tesla private at $420 a share and that he had "funding secured."
Musk later abandoned his plans to take Tesla private in an Aug. 24 blog post, saying that the majority of the shareholders wanted the company to remain public.