Tesla Inc. (TSLA) has been getting kudos for meeting its production goals for its mass-market Model 3 Sedan but based on a teardown of the green vehicle, UBS is not impressed.

In a recent research report covered by StreetInsider.com, the Wall Street firm reiterated its sell rating on Tesla and its price target of $195, which implies shares can slump 40%. The stock finished Wednesday’s trading session at $321.64.

Quality Issues With Model 3

According to UBS analyst Colin Langan, teardown experts found a slew of quality issues with the Model 3. In the research note, the analyst ticked off a list of flaws including missing bolts, inconsistent gaps throughout the vehicle, and uneven and misaligned spot welds to name a few. The analyst noted that the Model 3 sedan scored below average on the quality audit and that the teardown experts found the body and the nose of the Model 3 was “borderline” acceptable, reported StreetInsider.com. The Model 3 isn’t cheap, which prompted Langan to say in the note that the quality issues with its latest sedan are "disappointing for a $49K car." Tesla hasn’t sold a baseline $35,000 Model 3 Sedan yet, relying on pricier premium versions of the electric car. (See also: Investor Says Tesla Could Skyrocket to $4,000.)

[UPDATE: In response to the UBS report, Tesla issued this statement through a spokesman:

“Our customer satisfaction scores for Model 3 quality have averaged about 90% since January, with steady improvement through the year, even as the number of cars delivered has rapidly multiplied. Tesla customers never have to worry because if they are unhappy with their car when they receive it, they can either give it back for a full refund, allow us to address any issues, or ask for an entirely new Tesla.

As of April 2018, the standard deviation of all gaps and offsets across the entire car had already improved by nearly 40% on average, with particular gap improvements visible in the area of the trunk, rear lamps and rear quarter panel. Today, Model 3 panel gaps are competitive with Audi, BMW, and Mercedes models, but in the spirit of relentless improvement, we are working to make them even tighter. Our goal is to produce a perfect car for every customer.”]

Tesla Production on a Roll

The call out from UBS comes at a time when Tesla appears to be on a roll—if you ignore CEO Elon Musk’s controversial go-private tweets and subsequent fallout from them. (See also: Tesla Forms Special Committee on Going Private.)

Having hit its production goal to churn out 5,000 Model 3 sedans per week, the carmaker has slowed its burn rate and is gearing up to build a plant in China. It also comes as its Model 3 sedan cracked the top 10 list for best-selling passenger cars for the month of July for the first time ever. According to Goodcarbadcar, which analyzes sales data for the automobile industry, during the month of July, Tesla sold 14,250 Model 3 sedans, with it selling 38,617 year-to-date. That puts the electric vehicle in seventh place among all passenger cars sold in the U.S. last month. The sales data covers full-priced vehicle sales that were delivered—it does not include deposits on or reservations for cars. Notably, the Model 3 did better in terms of sales than a host of well-known models including the Ford Mustang, Toyota Prius and Hyundai Elantra.

Earlier this week, in an interview with popular YouTuber and Tesla fan Marques Brownlee, Musk said the company has a goal of boosting production and lowering costs to $25,000 per car. "If we work really hard, I think maybe we could do that in three years," said Musk. Musk also indicated that he'd like to improve production to a point where Tesla could make two cars at the same time. Tesla's list of vehicles waiting in the wings includes the crossover Model Y, a Tesla pickup truck, the Semi tractor-trailer and a next-gen Roadster.

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