What's happening

Shares of Chinese electric-vehicle maker NIO (NYSE:NIO) were down sharply in trading on Monday morning, as fears about a virus outbreak in China drove a broad-based sell-off of Chinese companies' stocks.

As of 11:00 a.m. EST, NIO's American Depositary Shares were down about 11% from Friday's closing price.

So what

NIO's shares have had quite a run. The company's stock price rose over 90% in the four weeks that ended last Friday, on a good sales report and rumors that the company was close to securing new financing. 

NIO Chart

NIO data by YCharts.

Given that run, it's no surprise that auto investors might be eager to take profits with concerns about an outbreak of coronavirus in China rising. The Chinese government has already shut down transportation in one city and is taking actions to limit movements elsewhere; it's thought that those actions -- and fears about the virus -- will likely put a damper on consumer spending in China in the near term.

A red NIO ES6, an upscale five-passenger electric crossover SUV.

Will the virus outbreak put a damper on sales of NIO's upscale electric SUVs? Image source: NIO.

Now what

NIO's stock price has reflected an ongoing tension: On the one hand, the company's cars are popular; on the other, it's not close to profitability and it's running short of cash. The stock's run over the last month has been driven in part by optimism around NIO's ongoing talks with GAC Group, one of China's largest automakers. 

But whether or not GAC ultimately makes an investment, NIO has to keep the lights on in the meantime, and it's almost certainly running very low on cash now. That effort will be greatly complicated if coronavirus fears keep Chinese consumers away from NIO's dealerships for more than a week or two. If you own NIO shares, watch this situation closely.