Morgan Stanley cut its bear (worst-case) forecast on Tesla's stock from $97 to just $10 on Tuesday, citing concerns about the company's increased debt load and geopolitical exposure.

In particular, Morgan Stanley analysts said the reduction was driven by concerns around Chinese demand for Tesla products.

"Our revised bear case assumes Tesla misses our current Chinese volume forecast by roughly half to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention," the research team, which included analyst Adam Jonas, said in the note.

Morgan Stanley expects the company to sell an average 165,000 units in China annually between 2020 and 2024, leading to a sales exposure of about $9 billion every year if the product is worth $55,000. However, in a bear scenario it assumes Tesla loses revenue with a fall in margins as the years progress, "resulting in lost value of $16.4 billion."

"Which on a per share basis is $87, bridging the gap between our old bear case of $97 and our new bear case of $10," the note said.

However, Jonas kept his main price target for the stock at $230 and also has a bull-case forecast of $391.

"We believe as Tesla's share price declines, the likelihood of the company potentially seeking alternatives from strategic/industrial/financial partners rises," the note said. "Based on our discussions with auto companies, suppliers, and technology firms, Tesla's strategic value and technical competency in both hardware and software remains extremely high if not in a league of its own."