Newly manufactured Tesla vehicles are placed on transport trailers from a large inventory of newly made vehicles in Burbank, California, August 24, 2018.

Tesla's electric car sales will suffer due to increased competition from other luxury automakers, according to Goldman Sachs.

The firm resumed coverage of Tesla with a sell rating, predicting the competition will cut into the company's share of the electric car market.

"We see the medium-to-longer term industry backdrop as challenging for Tesla's products; this follows from an increasing number of EV launches from both traditional OEMs and other start-up competitors — at a time when the company's product cadence hits a gap," analyst David Tamberrino said in a note to clients Tuesday. "We believe the company will see pressure to its lead in EVs as competition catches up."

Tesla shares were down 4.2 percent Tuesday.