In the classic 1989 movie Field of Dreams, Kevin Costner’s character keeps hearing a mysterious voice telling him, “if you build it, they will come,” prompting him to inexplicably build a baseball diamond on his Iowa corn farm.

It’s hard to tell if Elon Musk has heard voices telling him new customers will come in droves to buy Tesla (TSLA) models if he builds new plants, but their construction is nevertheless a concern raised by Wells Fargo’s Colin Langan.

“We estimate TSLA will double its global capacity to ~2m unit as new plants come online in ~2022. This compares to deliveries of ~500k in 2020. The new Cybertruck and Model Y launch in Europe should add demand; however all-in Model 3/Y sales would need to be ~1.7m to fully use this capacity. This would be higher than the best luxury sedan & SUV sales combined (~0.9m).”

Considering that over the last year, all of Tesla’s market share gains were driven by China, Langan thinks the recent protest at the Shanghai Auto Show and subsequent negative press is also a concern.

And it’s not as if Tesla is the only company intent on riding the EV boom. The number of available EV models is anticipated to double in the US this year, whilst global EV competition is “accelerating.”

That said, it’s not all doom and gloom, and Langan does throw some meat to the Tesla bulls, expecting deliveries will “surprise to the upside near term.”

However, there are other issues Tesla must contend with. Commodity prices have been on the rise in 2021, and EV batteries have not been spared. For example, the price of lithium is up by more than 59%, cobalt over 50%, and nickel 44%. And according to experts at Wells Fargo’s mobility conference, estimated battery costs have risen to $130-150/ kWh from the prior $105/kWh.

Luckily for Tesla, the near-term impact can be blunted to the “lower end of the range,” as for these materials, the company generally “locks in” longer term contracts.

Still, there will most likely be an extra cost of $1,375 per vehicle from the rise, which would eat into margins, once the contracts are renewed.

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That is not all that concerns Langan.

There’s also growing regulatory risk concerning Tesla’s “Autopilot” which only increased since an NTSB letter “raised concerns on the need to restrict the operational area of Level 2 autonomous systems and the need to add driver monitoring.”

In Europe, the use of these systems has already been limited by the regulators, and Langan thinks that putting limits on this important selling feature would be a negative for current owners, and might also “limit planned features in the full-self driving (FSD) roll out.”

To this end, Langan initiated coverage of Tesla with an Equal Weight (i.e., Hold) rating and $590 price target, suggesting the shares will stay range-bound for the foreseeable future. (To watch Langan’s track record, click here)

Looking at the consensus breakdown, the rest of the Street supports Langan’s thesis. Based on 10 Buys, 8 Holds and 7 Sells, the stock has a Hold consensus rating. Meanwhile, the $645.88 average price target implies upside of ~7% on the one-year timeframe. (See TSLA stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.