Tesla shares fell more than 7% on Monday after the company’s quarterly deliveries report led some investors to worry that more price cuts will be needed to drive sales, eating into margins.

Over the weekend, Tesla reported first-quarter deliveries of 422,875 electric vehicles and production of 440,808 cars. The record numbers for Tesla represented 4% growth in deliveries from the prior period and followed repeated price cuts in the U.S., China and Europe.

Some of the price reductions in the U.S. were implemented in part to enable Tesla and its customers to take advantage of tax credits available under the Inflation Reduction Act. But one ongoing concern is that increased competition will force the company to keep lowering prices if it wants to attract buyers as new EVs continue to hit the market.

“Many investors believe that Tesla’s recent price cuts reflect a structural cost advantage that will enable it to pressure rivals and capture outsize volume and dominate the EV market,” wrote Toni Sacconaghi, an analyst at Bernstein, in a note following the deliveries report. “We maintain that price cuts have and will undermine industry profitability (including Tesla’s), but that incumbents are deep pocketed and not likely to back down.”

Bernstein has a $150 price target on the stock, well below the current price of just over $193. Sacconaghi said, “The key question for investors is what might margins be, amid significant price cuts but improving commodity costs?”

Tesla’s first-quarter deliveries fell shy of Wall Street expectations, judging by a consensus compiled by FactSet. However, the numbers were inline with numbers compiled by Tesla and sent by the company to some shareholders before the report was published.

According to FactSet, analyst were expecting Tesla to report deliveries of around 432,000 vehicles for the quarter. Estimates ranged from 410,000 to 451,000. An independent researcher widely followed by Tesla fans and bulls, who uses the handle @TroyTeslike on Twitter, had been expecting deliveries of around 427,000.

Tesla said in its email to shareholders that analysts were expecting deliveries of around 421,500 vehicles, based on a consensus of 25 analysts tracked by the company.

For 2023, Tesla previously said it expects to produce 1.8 million cars and implied it intends deliveries around that amount. Company executives said they’re aiming for 50% annual growth on average in production volume and sales over a multi-year horizon.

Achieving that level of growth will likely require further price cuts, some analysts said.

According to Dan Levy of Barclays, who has a neutral rating on the stock and $275 price target, the buildup of vehicle inventory is a continuing trend over the last three quarters. He wrote that “incremental price cuts likely needed,” especially as the company ramps up production at new factories in Austin, Texas, and outside of Berlin.

— CNBC’s Michael Bloom contributed to this report

WATCH: CNBCs full interview with Bernstein’s Toni Sacconaghi