Tesla’s Model S and X cars are reaching the end of their product life cycle and will need a serious upgrade if the company wants to retain a luxury price tag, one auto analyst told CNBC.

Tesla shares were largely unchanged in after-hours trade Wednesday, after the electric car maker posted a wider-than-expected first-quarter loss on an adjusted basis.

The company blamed the dip on struggles to deliver its key Model 3 car to Europe and China, while demand slipped following the end of a tax credit for buyers in January. Tesla warned it will not return to profitability before the second half of this year.

Evercore ISI Group recently downgraded Tesla to an underperform rating and Head of Global Automotive Research, Arndt Ellinghorst, told CNBC’s “Street Signs” that the firm’s latest update confirmed his view about the risk of cash burn and liquidity at Tesla.

“If you claim that demand is huge and unlimited then the key question is, why do you lower your mix? Why do you lower your pricing?” Ellinghorst added.

The analyst said that in his call to investors, Tesla CEO Elon Musk had not been very clear about a pricing strategy to maintain demand. He added that the Model S, first introduced in 2012, and the SUV model X which debuted in 2015, were now starting to look “quite old.”

“I mean the S and the X are quite advanced in any normal life cycle of a product so they would really need significant refresh in order to restore the pricing.”

Tesla introduced the Model 3 sedan in 2017 and unveiled a compact SUV, known as the Model Y in March this year.

The Model Y is an attempt to tap into the hugely popular SUV market that dominates the U.S. car market in particular.

“We’ll probably do more Y than S, X, and 3 (sales) combined,” Musk claimed in March. By the time the Model Y comes to market in 2020 that would equate to more than 1 million vehicles.

Ellinghorst said both the Model 3 and Model Y would attract buyers but Musk’s promise of a million of sales looked unrealistic. He said pressure from rival German automakers would make it difficult to enter the car markets of Europe and China with any real scale.

“The brand will be less exclusive than it has been in the past,” he said.

Tesla said it lost $702 million on an adjusted basis, or $4.10 a share, in the first quarter while revenue reached $4.5 billion. The company also ended the quarter holding $1.5 billion less than at the end of 2018.

The stock price is down more than 22% year-to-date but Ellinghorst said at around $257 per share it is still too pricey.

“It is priced for growth and we don’t see how that growth is going to be financed.”

The analyst added that Musk had “opened the door” to fresh equity but investors might now be less interested given the recent reduction in both demand and pricing.

Disclaimer: Ellinghorst, his colleagues, and the Evercore company as a whole do not own a stake in Tesla.

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