Tesla Inc. and Panasonic Corp.’s plan to suspend the expansion of their battery plant suggested that the partners probably do not expect the electric vehicle maker to achieve its projected sales volumes, Roth Capital Partners analyst Craig Irwin said on Thursday.

The analyst maintained his stance that Tesla’s battery costs were too high for the company to achieve its aggressive targets for ramping up volume, as the cost made the cars too pricey for consumers. “We believe Tesla’s cells made at the Gigafactory are even more costly than imported cells from Japan, as the supply chain determines costs in batteries, not the size of any production facility,'' Irwin wrote in a note to clients.

Tesla shares dropped 3.4 percent in pre-market trading on Thursday after Nikkei reported that Tesla and Panasonic were freezing the expansion of the gigafactory near Reno, Nevada. The newspaper said financial problems had forced a re-think.

In an emailed statement to Bloomberg, Tesla said it would continue to make new investments in Gigafactory 1, as needed. “However, we think there is far more output to be gained from improving existing production equipment than was previously estimated,” the Tesla spokesman said.

Irwin, who holds the equivalent of a neutral rating on Tesla and cut his price target to $240 from $270, also said he expected competitors to emerge rapidly now that Tesla has proven the market. “The long-term value at Tesla, in our view, will be in the company’s impressive brand,'' the analyst added.

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