Shares of Tesla (TSLA 3.46%) were falling again today, this time on a bearish analyst rating.

HSBC initiated coverage on the stock with a rating of "reduce" and a $146 price target. The analyst offered a novel argument against Tesla stock, saying that the company is increasingly pitching itself as a business built around artificial intelligence (AI), and autonomous vehicles and robots, rather than electric vehicles (EVs). That is inherently much riskier than being a carmaker, and for that reason, the stock should have a higher cost of capital due to the regulatory and technological challenges it faces in the transition, making the stock worth less.

A Tesla Model 3 on a wintry road.

Image source: Tesla.

Is Tesla in trouble?

An analyst downgrade doesn't typically represent a material change in a stock, but CEO Elon Musk has hinted at the company's evolution into something beyond a carmaker. He has said that Tesla could eventually sell cars at cost and make a profit on services like autonomy that customers pay for separately or earn income through a ridesharing revenue share.

The stock has also come under pressure from broader weakness in the EV industry as there are widespread signs that demand is slowing and several major manufacturers, including Tesla, have cut back on production.

Is the stock headed lower?

Even as Tesla shares have pulled back since its earnings report, the stock still trades at a pricey valuation, making it vulnerable to a further slide. Revenue grew just 9% in its most recent quarter with automotive revenue up just 5%, and its margins are rapidly compressing.

Meanwhile, the EV maker is slow-walking the opening of its factory in Mexico due to broader concerns about the economy.

As HSBC observes, Tesla stock is trading at a premium in part because of its promise of autonomous vehicles and AI robots. However, without meaningful progress in those areas, the stock is likely to continue falling -- the EV market appears to be heading into a sustained correction as demand weakens and production gets cut.