Tesla (Nasdaq: TSLA) reports earnings Wednesday after the close. They already guided below the Street for Q4 but we think there's a material risk in Q1.

The reduced tax credit can slow demand in Q1. If demand was already weaker than expected, reducing the tax credit can be a further drag in Q1.

Add to that Europe and China don't ramp until at earliest later in the quarter. So, as of their speaking to the Street on Wednesday, Tesla management will likely have limited visibility.

To give you an idea of the slowdown listen to what they said in their preannouncement January 18th, "However, starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles".

When they say they need to reach "customers who can afford our vehicles" they are likely referring to the drop in the tax credit hitting demand. Also, lower-priced cars will drive lower margins hitting earnings this year.

I still think there is a stock risk because our earnings numbers are still much higher than the Street. That could come out in Wednesday's earnings call.