“Battery combustion is a very serious incident for consumers, and it could lead to consumer aversion to electric vehicles,” Automotive Energy Supply Corp., whose batteries power about 430,000 Nissan Motor Co. vehicles, said in an email. “We are determined not to cause serious accidents and put damage on the industry, and we believe that now it is more important to proceed with caution.”

There’s reason to be worried. Should Chinese consumers slow their shift to plug-ins because of safety concerns, it would be a serious blow to the nascent segment. The nation accounts for more than half of all electric passenger-car sales worldwide.

While China is forecast to remain the largest market for the next two decades, sales are already slowing and growth will probably continue decelerating until 2021 as the government phases out subsidies, according to BloombergNEF.

Read more: China Set to Dominate Electric Vehicle Battleground For Decades

In response to the latest incident, Tesla is rolling out an over-the-air software update for two of its vehicles, including the flagship Model S, to improve safety and battery life as it continues investigating the cause of the Hong Kong fire. The action will revise charge and thermal-management settings “out of an abundance of caution,” the company said in a statement. Teslas are 10 times less likely to experience a blaze than cars that run on combustion engines, the company said.

Early findings on the incident in Hong Kong showed only a few battery modules — clusters of smaller cells — were affected, and that the majority of the car’s battery pack was undamaged, according to Tesla. Hong Kong’s Transport Department said it’s liaising closely with the company on the May 12 incident and the one in Shanghai, given the similarity of the cases.

Panasonic Corp., which makes Tesla’s batteries, didn’t specifically address the fires in an email. “We are working with car manufacturers to develop battery systems with higher performance while putting safety as our top priority,” the company said.

For EVs, the risk of a fire or explosion is comparable — or potentially slightly lower — than for gas or diesel-fueled models, according to a 2017 report commissioned by the U.S. National Highway Traffic Safety Administration. However, safety risks may increase as manufacturers work to boost performance and push battery cells closer to their limits, the study found.

The recent incidents weren’t unprecedented. In 2018, China recorded at least 40 fire-related cases involving new-energy vehicles — a category that includes pure-electric, hybrids and fuel-cell vehicles — according to the State Administration for Market Regulation.

The electric-car sector is grappling with the challenges of quality control, boosting performance and expanding capacity to meet rising demand for batteries, said Simon Moores, London-based managing director of industry consultant Benchmark Mineral Intelligence. Demand for lithium-ion batteries for EVs will surge by more than 10 times through 2030, while prices will continue to tumble, according to BNEF.

Rapid growth means the sector “will no doubt see increasing quality control issues with the supply chain,” Moores said. “The biggest challenge for all EV makers is to ensure quality and consistency runs right through the supply chain — from raw material selection to chemicals to battery cell — and into the pack and vehicle.”

Though recent fires are negative for automakers, any impact on sales will probably be limited, said Toliver Ma, a Hong Kong-based analyst at Guotai Junan Securities Co.

“Tesla and NIO have built up a large fan base and should be able to minimize the impact,” Ma said.

Fatal Tesla Crash in March Is Latest to Involve Autopilot

It’s not just cars. A series of at least 21 fires at energy-storage projects in South Korea between August 2017 and February, as well as a blaze at an Arizona facility last month fueled concern about the safety of lithium-ion batteries. Korean Reinsurance Co. almost tripled its rate for local storage projects in response, while new deployments in the nation this year may be about half of those in 2018, according to BNEF.

The incidents threaten to “slow the breakneck pace of adoption of grid storage systems,” said Sam Jaffe, managing director at Boulder, Colorado-based Cairn Energy Research Advisors. “It’s definitely a black eye for the stationary storage industry.”

Still, the recent storage fires in Korea may be isolated cases so they don’t necessarily point toward a global problem, BNEF analyst Logan Goldie-Scot wrote in a February report.

For both vehicles and storage systems, there is a suite of potential advances in battery technology that could upgrade safety, including the deployment of high-performance insulating materials, ceramic coatings for battery separators, and the use of solid electrolytes.

Read more: Race for Next-Generation Battery Supremacy Has an Early Leader

Solid-state batteries, in particular, are commercially promising as they would offer an upgrade from existing lithium-ion packs in terms of safety and driving range. Scientists, cell manufacturers and automakers from Japan to the U.S. are competing on the technology, with Toyota Motor Corp. seen as leading the field.

While some trial production of solid-state batteries is planned to begin in the early 2020s, it will be another decade before the products are widely available in mass-produced vehicles, according to BNEF.