Wall Street got off to a cool start on Monday morning as market participants tried to weigh the benefits of a strong economy against threats like rising COVID-19 case counts and geopolitical worries. As of 11:30 a.m. EDT, the Dow Jones Industrial Average (^DJI 0.04%) was down 103 points to 35,413. The S&P 500 (^GSPC -0.16%) fell 22 points to 4,446, while the Nasdaq Composite (^IXIC -0.18%) declined 166 points to 14,657.

Among hard-hit industries were electric vehicle stocks, which suffered declines nearly across the board. In particular, two news items from Nio (NIO -0.69%) and Tesla (TSLA 0.79%) had some investors questioning whether their recent rebounds would be sustainable. Below, we'll look more closely at their stories and what they mean for the EV industry.

Nio deals with fallout from fatal accidents

Shares of Nio were down more than 6% on Monday morning. Shareholders responded negatively to news about one of the Chinese automaker's vehicles and an apparent failure in its driver assistance platform.

Nio vehicle inside a proprietary garage.

Image source: Nio.

A prominent Chinese businessperson died in a crash involving a Nio ES8 electric SUV, according to a social media release issued over the weekend. Lin Wenqin, who has founded several companies in the restaurant industry, was killed in an accident on Thursday. According to Lin's obituary, the Nio's Navigate On Pilot driver assistance system was active at the time of the crash.

The news came only a couple weeks after another fatal incident involving a Nio vehicle in China. Together, the accidents have shareholders worried that a more in-depth investigation from Chinese authorities could prove to be problematic for Nio's long-term aspirations for building a system providing fully autonomous driving for its vehicles.

Tesla goes along for the ride

Meanwhile, regulatory issues also hurt shares of Tesla on Monday morning. The EV pioneer's stock was down more than 5%.

The U.S. National Highway Traffic Safety Administration opened a formal investigation into Tesla's own Autopilot driver assistance system on Monday. The NHTSA release indicated that the investigation would center on accidents related to emergency vehicles, citing 11 crashes in which Tesla EVs using Autopilot have come upon incidents involving first responders and then hit one or more of their emergency vehicles.

The investigation includes about 765,000 Tesla Model 3, Y, S, and X vehicles. It will look more closely at the extent to which the Autopilot system or associated driver assistance capabilities might have been involved in the crashes, with the goal of establishing better ways to ensure drivers can avoid similar incidents in the future.

Tesla has undergone investigations from regulators in the past, so the latest news only adds to a general concern investors have had about the automaker's stock for a while now. Moreover, with sky-high demand for lithium and other key raw materials that go into mission-critical EV production components like batteries, shareholders might well be worried about a host of potential bottleneck issues that could put up a roadblock between Tesla and its production growth goals.

Be careful out there

Shares of other EV stocks were also generally lower on the day. XPeng (XPEV 3.34%) saw its stock drop nearly 7%, while Li Auto (LI -0.89%) was down almost 4%. Losses for U.S. EV stocks were more modest, with Nikola (NKLA 8.37%) and Lordstown Motors (RIDE 8.75%) down between 1% and 2%.

There's a lot of hope that Nio, Tesla, and other EV companies will be able to revolutionize the transportation industry. As they make progress, though, they'll have to keep overcoming the safety concerns that many have about autonomous driving. Until they do, temporary setbacks like this will be inevitable.