(Bloomberg) -- Tesla Inc. this week tempered its growth expectations, signaling that pain is coming for the electric-vehicle industry, a Morgan Stanley analyst said on Friday. 

Adam Jonas, a long-time bull on the EV behemoth, said investors should seriously consider the broader implications for the EV industry globally after the company’s disappointing third-quarter results and its cautious earnings conference call. Demand seems to be slowing for the carmaker, Jonas said.   

“We see a warning from the ‘gold standard’ of EVs having a ripple effect across the industry,” Jonas wrote in a note to clients entitled “Tesla’s 3Q: A Watershed Warning to the EV Industry?”  

After market close on Wednesday, Tesla posted results that fell short of analysts’ expectations for both adjusted earnings and revenue. The company’s price cuts for its cars are only going so far in boosting demand. Elon Musk, chief executive officer, yet again blamed rising interest rates in the US, saying that higher financing costs boost monthly payments, making it harder for people to buy a car. Overall, the company dialed back expectations for the future, dashing some investors’ hopes that the worst is past for the company.

Musk’s gloomy comments pushed Tesla shares down 9.3% on Thursday, the biggest decline in over three months. The stock was falling again Friday, dropping as much as 4.4% to $210.42 in New York.  

Tesla is the leading EV maker globally, and its cautious stance is bad news for EVs broadly, Jonas said. Other companies, whether startups or established carmakers, are still a long way behind Tesla in the electric vehicle race, according to an analysis from Bloomberg New Energy Finance. 

Detroit-based US-based carmakers have higher costs because of their unionized labor forces, so if Tesla is struggling to generate decent margins on the vehicles, older automakers could face more trouble. And the trouble that Tesla is experiencing could have implications for EV suppliers too.  

“If Tesla struggles to generate a 5% operating profit margin for its EV products with US workers making $45/hour, what’s the EV margin outlook for Detroit carmakers whose EV workers may potentially earn closer to $100/hour in all in comp and benefits?,” Jonas wrote. General Motors Co., Ford Motor Co. and Stellantis NV are currently facing labor strikes as unions negotiate for a significant pay hike.   

Still, Jonas maintained his buy-equivalent rating on Tesla, saying that it makes sense for the company to stay cautious at a time of elevated macro, consumer and geopolitical risk.  

“While the reset may hurt shares near term, we believe this may prove to be the right strategy for the company and its stakeholders over the long term,” Jonas said. 

--With assistance from Dana Hull.

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