Tesla shares will fall dramatically the rest of this year because CEO Elon Musk's plan to go private is becoming more tenuous, J.P. Morgan said Monday.

After the note, Tesla shares closed up 1 percent Monday.

The firm slashed its December price target for Tesla shares back to $195 from $308, representing 36 percent downside to Friday's close.

"We are reverting to valuing Tesla shares on the basis of fundamentals alone, which entails a $113 reduction in our price target back to the $195 level where it stood prior to our August 8 note," analyst Ryan Brinkman said in a new analysis. He told clients the price target increase to $308 on that date had been based on a 50 percent probability that Musk had in fact secured funding to take Tesla private at $420 a share. Musk made that claim in a tweet on Aug. 7.

"Our interpretation of subsequent events leads us to believe that funding was not secured for a going private transaction, nor was there any formal proposal," Brinkman said in his latest note.

He reiterated his underweight rating for the carmaker.