Shares of Tesla (TSLA.O) dropped on Monday after a downgrade by Goldman Sachs, bringing the electric carmaker's decline to 11 per cent since its quarterly report last week stoked worries about how much cash it is using to launch its Model 3 sedan.

Concerns that Tesla's Model 3 production this year might be delayed, as well as expectations the company will sell stock to raise US$1.7 billion, led Goldman Sachs analyst David Tamberrino to downgrade Tesla to "sell" from "neutral".

That helped push the stock down as low as US$242.55 in morning trade on Monday. The share price recovered some of the losses to reach US$244.01 by 2 p.m. ET.

Even with the recent drop, Tesla has surged more than 30 per cent since early December and is up 14 per cent in 2017.

Tesla has traded between US$180 and US$280 in recent years, and after hitting 2015 highs earlier this month, it may be headed toward the bottom of that range, Tamberrino wrote in a note to clients.

Tesla investors and short sellers disagree about whether the company will become a carbon-free energy and transportation heavyweight or be overtaken first by older, deep-pocketed manufacturers such as General Motors Co (GM.N).

Seven analysts recommend selling Tesla's shares, while six recommend buying and seven have neutral ratings. Few stocks on Wall Street attract more "sell" than "buy" ratings.

Last May, Goldman Sachs's previous Tesla analyst, Patrick Archambault, raised his rating on Tesla to "buy" from "neutral" hours before the bank helped launch a secondary stock offer for the company.

The timing of the two events attracted attention on Wall Street because banks are required to keep their underwriting activities separate from their broker research.