Tesla stock falls after Morgan Stanley note

Tesla Model S decal.
Adam Jeffery | CNBC
Tesla Model S decal.

Tesla Motors stock dropped Monday after Morgan Stanley suggested that its shares had risen for the wrong reasons.

Shares in the electric car maker fell more than 9 percent by Monday afternoon, after Morgan Stanley researchers posited that they "do not expect the stock to appreciate so consistently and one-directionally from here."

One of the major concerns that the analysts noted is the failure of other electric vehicles across the developed world, which could lead to the industry to lobby for a "substantial revision" of air quality regulations "to slow down the pace of milestones they have little hope of achieving (besides Tesla)."

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A view of the dashboard in a new Tesla Model S car at a Tesla showroom on November 5, 2013 in Palo Alto, California.
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Morgan Stanley analysts also wrote that Tesla may have difficulty keeping up with Chinese demand, and that the eventual switch to autonomous vehicles may negate Tesla's current strategic advantages.

Still, the analysts said that Tesla's shares are ultimately worth $320, despite perhaps moving toward that target too quickly.

Last week, Tesla CEO Elon Musk suggested that investors often "get carried away" with his stock price.

Read MoreTesla sinks after Musk's 'kind of high' comment

"I think our stock price is kind of high right now," Musk said last week, responding to a question from CNBC at a news conference. "If you care about the long term, Tesla, I think the stock is a good price. If you look at the short term, it is less clear."

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—By CNBC staff