'Cautious' on Tesla despite Model 3 launch: Expert

Tesla Motors' launch of a cheaper car this week will fail to negate the electric automaker's existing problems, one analyst contended Monday.

"I think there are a lot of reasons to be really cautious," said Colin Langan of UBS on CNBC's "Closing Bell."

Tesla on Thursday will unveil the Model 3 car, which starts at about $35,000. Production of the vehicle, which costs less than the luxury Model S and Model X, will begin late next year.

Tesla dealership
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Tesla dealership

Despite sliding about 4 percent this year, Tesla shares have climbed nearly 25 percent in the past 12 months. But Langan believes capital expenditures and possible market saturation will weigh on the money-losing automaker's shares.

"They're burning cash at this point so that's another critical risk that investors should be focused on," he said.

Langan has a "sell" rating and $120 price target on Tesla. The stock closed at about $230 per share on Monday.

While Langan contended Tesla will struggle to expand at its current pace, Stifel analyst James Albertine argued the company will expand at both the low and high ends.

"If you dig through the numbers, they are going to continue to grow at a significant pace at the luxury high end, taking share there," he said Monday on "Closing Bell."

Albertine, who has a "buy" rating and $325 price target on Tesla shares, said the production volume of the cheaper Model 3 will help Tesla sustain its growth.

Last month, Tesla said it expects to deliver 80,000 to 90,000 new vehicles in 2016. It delivered roughly 50,000 in 2015.