Electric vehicle stocks take a hit as markets see Monday morning drop

Wall Street got off to a good start on Monday morning as market participants tried to weigh the benefits of a strong economy against threats such as rising COVID-19 cases and geopolitical concerns. Starting at 11:30 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^ DJI) was down 103 points to 35,413. S&P 500 (SNPINDEX: ^ GSPC) lost 22 points to 4,446, while the Nasdaq Composite (NASDAQINDEX: ^ IXIC) decreased by 166 points to 14,657.

Among the hard-hit sectors are electric vehicle stocks, which have suffered declines almost everywhere. In particular, two short stories from Nio (NYSE: NIO) and You’re here (NASDAQ: TSLA) some investors have questioned whether their recent rebounds will be sustainable. Below, we’ll take a closer look at their stories and what they mean for the EV industry.

Nio faces the fallout from fatal accidents

Nio shares fell more than 6% on Monday morning. Shareholders reacted negatively to the news about one of the Chinese automaker’s vehicles and an apparent failure of its driver assistance platform.

Image source: Nio.

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

The news came just weeks after another fatal incident involving a Nio vehicle in China. Together, the accidents have raised concerns among shareholders that a further investigation by Chinese authorities could prove problematic for Nio’s long-term aspirations to build a system that provides fully autonomous driving for its vehicles.

Tesla accompanies the ride

Meanwhile, regulatory issues also hurt Tesla’s shares on Monday morning. The action of the pioneer of electric vehicles fell by more than 5%.

The U.S. National Highway Traffic Safety Administration on Monday opened an official investigation into Tesla’s own Autopilot driver assistance system. The NHTSA statement said the investigation would focus on emergency vehicle crashes, citing 11 crashes in which Tesla electric vehicles using autopilot ran into incidents involving first responders and then struck one or more. several of their emergency vehicles.

The investigation covers approximately 765,000 Tesla Model 3, Y, S and X vehicles. It will take a closer look at the extent to which the autopilot system or associated driver assistance capabilities may have been involved in the crashes, in the aim of establishing better ways to ensure that drivers can avoid similar incidents in the future.

Tesla has been the subject of investigations by regulators in the past, so the latest news has only added to general investor concern over the automaker’s shares for some time now. Additionally, with skyrocketing demand for lithium and other key raw materials going into mission-critical electric vehicle production components like batteries, shareholders may well be worried about a host of bottleneck issues. potential bottlenecks that could be an obstacle between Tesla and its production growth. goals.

Be careful there

Shares of other EV stocks were also generally down that day. XPeng (NYSE: XPEV) saw its stock drop by almost 7%, while Li Auto (NASDAQ: LI) was down almost 4%. Losses in U.S. electric vehicle stocks were more modest, with Nicolas (NASDAQ: NKLA) and Lordstown Engines (NASDAQ: RIDE) between 1% and 2%.

There is a lot of hope that Nio, Tesla and other electric vehicle companies will be able to revolutionize the transportation industry. As they progress, they will need to continue to overcome the safety concerns that many have about autonomous driving. Until they do, temporary setbacks like this will be inevitable.