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Tesla stock falls after Goldman Sachs downgrade

File photo: Tesla workers assemble a Model S at the Fremont Factory. (Patrick Tehan/Staff)

Tesla stock took a hit Monday as Goldman Sachs downgraded its outlook for the electric vehicle maker.

An analyst at the investment bank dropped the company from neutral to sell, based on uncertainties about Model 3 production, SolarCity’s performance after its acquisition and the company’s likely need to raise more cash.

Tesla shares tumbled about 4 percent in Monday trading, ending the session at $246.23.

Tesla set vehicle production records last year, but again struggled to post a full-year profit. Nevertheless, the company’s stock climbed about 50 percent in the last three months.

CEO Elon Musk said last week the Fremont factory is slated to ramp up to as many as 5,000 Model 3 vehicles per week by the end of 2017. Tesla expects to deliver between 47,000 to 50,000 Model S and Model X vehicles in the first half of of the year.

Simpler design is the key to faster manufacturing of the Model 3, Musk said. “A lot of the bells and whistles on a Model S and X are not present on a Model 3,” he said. The lower-cost electric sedan, starting at $35,000 and reaching more than 200 miles on a single charge, is Tesla’s first move into a broader market.

Competition in the market for lower-cost, long-range EVs has already arrived. The all-electric Chevy Bolt, priced around $37,500 before federal and state rebates, is rated at 238 miles of range.

Musk expects the Tesla factory will produce 500,000 vehicles next year. Engineers have been re-assigned to remake the plant and increase volume. Tesla halted manufacturing for a week in February to prepare for Model 3 work. Construction permits reviewed by this newspaper show the company has just begun work, starting about $5 million in projects at the main plant.

Making a half-million cars would make the Fremont plant one of the most productive auto manufacturers in the world.

Goldman Sachs isn’t the only investment firm skeptical of Tesla’s promises to reach record vehicle numbers. Barclays predicted Tesla would not deliver the Model 3 this year.

R.W. Baird & Company analyst Ben Kallo remained bullish on the company, believing new sedan manufacturing is on track and the SolarCity merger exceeded revenue expectations.