Tesla has been ceding ground in Europe, with its Model 3 now only the fourth-best selling pure electric vehicle (EV) on the continent, according to recent statistics.
The European EV market is now the biggest in the world in terms of sales following a surge in 2020 accompanying a slump in China. The portion of new car registrations that are electric is twice that of China and five times that of the U.S.
In a note Wednesday, Saxo Bank Head of Equity Strategy Peter Garnry said Tesla's outpacing by Renault, Volkswagen and Hyundai in recent months should have shareholders "alarmed."
"Tesla will be successful and become one of the biggest carmakers in the future, but the competition is heating up and that puts the $805 billion market value into question," Garnry said.
Tesla's stock is up more than 21% in the first two weeks of 2021, having soared more than 700% during 2020.
Garnry noted that November's European vehicle registration figures showed that plug-ins, a combination of pure electric and hybrid vehicles, rose by 198% year-on-year, while total car registrations across the continent were down 14%.
Plug-in vehicles now account for around 10% of overall market share in Europe, with pure EVs representing around 5.4%.
Garnry said clients had contended that Tesla sales are typically stronger in the last month of the quarter, but highlighted that sales slipped in both October and November.
In the latest EV rankings, the Renault Zoe held onto the top spot, closely followed by the VW ID.3, according to sales figures from plug-in vehicle market database EV Volumes. Hyundai's Kona was third ahead of the Tesla Model 3.
"While this should worry Tesla shareholders, it is even more striking that the Model S and X are not in the top 20 ranking despite direct competing models such as Audi e-tron being on the list," Garnry added.
Tesla was not immediately available for comment when contacted by CNBC.
On Thursday, Renault's new CEO Luca de Meo announced that the French automaker would move to a more electric line-up, along with building a battery plant in France with one of its suppliers.
"We'll move from a car company working with tech to a tech company working with cars," de Meo said.
China demand the 'heart and lungs'
Tesla's stock is currently changing hands at $845 per share, and in a note Thursday, U.S. investment firm Wedbush Securities raised its price target to $950 per share from $715, with a bullish case scenario of $1,250.
Wedbush cited a surge in demand for EVs and the Model 3 from China, which it defined as the "heart and lungs" of the case for owning Tesla stock.
"While there are 150+ auto makers aggressively going after the EV opportunity globally, right now in the EV market we believe it's Tesla's world and everyone else is paying rent," Wedbush analysts Daniel Ives and Strecker Backe said in the note.
They projected that by 2022, more than 40% of Tesla's overall delivery sales will come from China, while the Democrats controlling all three branches of the U.S. government will provide a substantial boost for EVs more broadly, given President-elect Joe Biden's climate agenda.
"We believe that the China growth story is worth at least $100 per share in a bull case to Tesla as this EV penetration is set to ramp significantly over the next 12 to 18 months, along with major battery innovations coming out of Giga 3 (Tesla's Shanghai factory)," they said.
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