Tesla, Inc. (NASDAQ:TSLA) price cuts have alienated another long-time bull, who dropped his bullish stance and tempered his price target for the stock.

The Tesla Analyst: Jefferies analyst Philippe Houchois downgraded Tesla stock from Buy to Hold and reduced the price target from $230 to $185.

The Tesla Thesis: Telsa's stepped-up transition to a world of sustainable energy and resource efficiency may slow down electric vehicle penetration and accelerate profit normalization for the industry, analyst Houchois said in a note.

The first-quarter results, the analyst said, did not validate demand elasticity offsetting lower prices. Cost progress may take longer to materialize, he said. Management is willing to accept lower margins for now as long as the company remains self-funded, he noted.

"It is hard to get comfortable with near-term earnings but the focus on model concentration, hyper-scaling, continuous improvement and design-to-manufacture all look intact," Houchois said.

The auto industry's "structurally low returns may prevail over Tesla in the end, since it is harder to challenge a large established industry than create a new one," the analyst said.

See Also: Everything You Need To Know About Tesla Stock

Houchois said engineering over-performs but marketing and product planning have lacked foresight and finesse to ensure steadier growth, cash flow and residual values.

As such, the analyst lowered his 2023 revenue estimate by 7% to $96.6 billion and ASPs by 4% to $46,000, core auto margin to 19%, EBIT by 32% to $10.4 billion and free cash flow by 44% to $7.4 billion.

Tesla's strategy of growth over margin has its logic and resets expectations, Houchois said. The strategy also questioned whether the EV pioneer's profit edge over rivals was structural or a timing difference, he said.

The "relative price aggression is not supportive of a high multiple investment case while unfolding," the analyst said.

Tesla Price Action: Tesla shares traded up 0.14% at $160.90, according to Benzinga Pro data.

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