Analysts at Goldman Sachs lowered its 12-month price target on Tesla from $158 to $200 saying they expecting shares to continue to decline over demand concerns. This would represent 30% drop from Tesla’s current levels which closed at $226.43 on Wednesday.

“We believe a downward path for shares will resume as it becomes more clear that sustainable demand for the company’s current products are below expectations,” said David Tamberrino, a Goldman Sachs analyst.

Earlier this month, while addressing the investors at the company’s annual shareholder meeting in Mountain View, California, CEO Elon Musk said that the sales had far exceeded the production in past three months and there was a “decent chance” of a record quarter. Which according to the company could mean between 90,000 to 100,000 deliveries.

Tesla’s share were marked 2.6% lower at the start of Thursday. The shares went up as far as 1.2% in pre-market dealing before Goldman Sachs cut the price target.

In a client note, Tamberrino added, “”Further, when coupled with a lack of direct impetus to open up new demand pockets (other than introducing incentives or more attractive financing rates) and another step-down in the US Federal Tax Credit for Tesla vehicles beginning on July 1, we believe 2019 was a better environment for demand and thus deliveries, but to a level that is likely not sustainable.”

The US Federal EV Tax Credit for Tesla will become half from $3,750 to $1,875 per vehicle from next month. So to increase demands the company will need to cut down the prices of its vehicles and make them affordable. But this would mean Tesla’s revenue will suffer. If prices are not lowered, Tesla cars might become more expensive.

Even though Musk has assured his investors that the demands are high, this note from Goldman Sachs will only add to the troubles the company is already facing. Either way the only chance it has to bounce back in the market is by meeting its target in Q2.

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