Morgan Stanley slashed its recommendation on Contemporary Amperex Technology Co. to underweight, expecting geopolitical tensions to hinder the Chinese battery giant’s expansion into US markets.

Restrictions under the Biden administration’s Inflation Reduction Act — which requires certain materials to be sourced and assembled within the US to receive tax benefits — mean electric vehicle battery exports from China to North America are now unlikely, analysts including Jack Lu wrote in a Wednesday note.

“Potential geopolitical, national security risks may lead to delays in Chinese battery makers’ global expansion plans versus Korean battery makers’ accelerating expansion,” they wrote.

Shares of CATL, a Tesla supplier, fell for the third day on Wednesday, losing as much as 6.8%. The stock is among the day’s worst performers on the CSI 300 Index, which is little changed.

Morgan Stanley’s underweight call is the only sell-equivalent recommendation among moer than 40 ratings tracked by Bloomberg. The brokerage earlier this year raised the rating to equal-weight, only to cut again now.

CATL also faces significant margin pressure as second-tier manufacturers adopt more aggressive pricing strategies to gain market share, the analysts wrote. The fact that some other domestic manufacturers have adopted new battery suppliers also shows risk to CATL’s dominance, they wrote.

Concerns over exports rose this week as Tesla’s website showed its Model 3 vehicles are eligible for a tax credit of $7,500, suggesting that sourcing and manufacturing requirements may limit CATL’s expansion stateside.

Morgan Stanley lowered the stock’s price target by 16% to 180 yuan. Shares closed at 219.28 yuan on Tuesday.