What happened

Shares of electric-car company Tesla (TSLA -1.22%) fell on Monday, declining as much as 7.5%. As of 12:17 p.m. EDT, the stock was down 3.6%.

The stock's decline follows an analyst's decision to lower his price target for Tesla shares.

So what

Wedbush analyst Daniel Ives reiterated a neutral rating for Tesla stock over the weekend. But he also lowered his 12-month price target for the stock from $275 to $230. This is down significantly from the $440 price target and outperform rating he had for the stock last December.

A red Model 3 driving at sunset

Model 3. Image source: Tesla.

The analyst is unimpressed by Tesla's recent efforts to build hype for its autonomous taxi service plans and other projects beyond the Model 3, worrying they are taking energy away from the company's most important priorities.

Ives explained, "With a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors when the company instead should be laser focused on shoring up core demand for Model 3 and simplifying its business model and expense structure in our opinion with headwinds abound."

Now what

Ives' reference to a "code-red situation" likely refers to the company's recent decision to raise capital and cut costs following a $702 million first-quarter loss. These moves could be a sign that demand for Tesla's Model 3 is proving to be worse than management expected.

Unfortunately, investors may not know exactly how demand for Model 3 is faring until Tesla reports its second-quarter vehicle deliveries a few days into July.