Tesla was downgraded to underperform due to declining demand across all models. But Evercore analyst Arndt Ellinghorst is also concerned about the company’s ability to manage increased market competition and lower U.S. tax credits in the coming year. Ellinghorst expects earnings to decline by as much as 40 percent by 2020.

Tesla’s 12-month price target dropped from $330 per share to $240 per share, which is a significant drop. As of Monday morning, Tesla’s shares are down more than three percent.

Tesla faces many challenges in 2019

It’s been a rough year for Tesla and company shares have fallen by more than 18 percent year to date. Both the company and its founder Elon Musk have been the subject of dozens of investigations.

The SEC filed a motion to hold Musk in contempt of court, arguing that he had violated an agreement made with federal regulators. And the NHTSA and NTSB initiated new investigations of Tesla in March after a fatal crash involving a Model 3.

And customer demand continues to decline across all models but especially for the Model S/X. This is partially due to decreased tax incentives beginning in January. In 2018, drivers received a $3,750 credit but this dropped to $2,000 to account for the tax credit reduction.

On Friday, Tesla announced that four board members would be leaving at the end of their terms. The company said this would “streamline” the board and allow it to operate more efficiently. The company’s stock dropped immediately following the announcement.

Conclusion

On Wednesday, Tesla is expected to post its first-quarter earnings review. Musk has already stated that the company is unlikely to turn a profit in this quarter, a reversal from his previous statement. The company is expected to post losses of .90 cents per share according to Bloomberg.

Tesla has a lot to work on in the coming year to regain investor confidence and become profitable. Ellinghorst said that he still believes in the vision of Tesla and that the company’s future growth prospects look promising. However, the uncertainty around demand for the models could stall the company’s growth in the short-term.