diff --git a/.github/workflows/nvm-install-test.yml b/.github/workflows/nvm-install-test.yml
new file mode 100644
index 0000000..fd82d2b
--- /dev/null
+++ b/.github/workflows/nvm-install-test.yml
@@ -0,0 +1,104 @@
+name: 'Tests: nvm install with set -e'
+
+on:
+  pull_request:
+  push:
+  workflow_dispatch:
+    inputs:
+      ref:
+        description: 'git ref to use'
+        required: false
+        default: 'HEAD'
+
+jobs:
+  matrix:
+    runs-on: ubuntu-latest
+    outputs:
+      matrix: ${{ steps.matrix.outputs.matrix }}
+    steps:
+      - uses: actions/checkout@v4
+        with:
+          fetch-depth: 0
+      - id: matrix
+        run: |
+          if [ "${{ github.event_name }}" == "workflow_dispatch" ] && [ -n "${{ github.event.inputs.ref }}" ]; then
+            echo "matrix=\"[\"${{ github.event.inputs.ref }}\"]\"" >> $GITHUB_OUTPUT
+          else
+            TAGS="$((echo "HEAD" && git tag --sort=-v:refname --merged HEAD --format='%(refname:strip=2) %(creatordate:short)' | grep '^v' | while read tag date; do
+              if [ "$(uname)" == "Darwin" ]; then
+                timestamp=$(date -j -f "%Y-%m-%d" "$date" +%s)
+                threshold=$(date -j -v-4y +%s)
+              else
+                timestamp=$(date -d "$date" +%s)
+                threshold=$(date -d "4 years ago" +%s)
+              fi
+              if [ $timestamp -ge $threshold ]; then echo "$tag"; fi
+            done) | xargs)"
+            echo $TAGS
+            TAGS_JSON=$(printf "%s\n" $TAGS | jq -R . | jq -sc .)
+            echo "matrix=${TAGS_JSON}" >> $GITHUB_OUTPUT
+          fi
+
+  test:
+    needs: [matrix]
+    runs-on: ubuntu-latest
+    continue-on-error: ${{ matrix.ref == 'v0.40.0' }} # https://github.com/nvm-sh/nvm/issues/3405
+    strategy:
+      fail-fast: false
+      matrix:
+        ref: ${{ fromJson(needs.matrix.outputs.matrix) }}
+        has-nvmrc:
+          - 'no nvmrc'
+          - 'nvmrc'
+        shell-level:
+          - 1 shlvl
+          - 2 shlvls
+
+    steps:
+      - uses: actions/checkout@v4
+      - name: resolve HEAD to sha
+        run: |
+          if [ '${{ matrix.ref }}' = 'HEAD' ]; then
+            REF="$(git rev-parse HEAD)"
+          else
+            REF="${{ matrix.ref }}"
+          fi
+          echo "resolved ref: ${REF}"
+          echo "ref="$REF"" >> $GITHUB_ENV
+      - run: echo $- # which options are set
+      - run: echo node > .nvmrc
+        if: ${{ matrix.has-nvmrc == 'nvmrc' }}
+      - run:  curl -I --compressed -v https://nodejs.org/dist/
+      - name: 'install nvm'
+        run: |
+          set -e
+          export NVM_INSTALL_VERSION="${ref}"
+          curl -o- "https://raw.githubusercontent.com/nvm-sh/nvm/${ref}/install.sh" | bash
+      - name: nvm --version
+        run: |
+          set +e
+          . $NVM_DIR/nvm.sh && nvm --version
+      - name: nvm install in 1 shell level, ${{ matrix.has-nvmrc }}
+        if: ${{ matrix.shell-level == '1 shlvl' }}
+        run: |
+          set -ex
+          . $NVM_DIR/nvm.sh
+          echo nvm.sh sourced
+          nvm --version
+          if [ '${{ matrix.has-nvmrc }}' == 'nvmrc' ]; then
+            nvm install
+          fi
+      - name: nvm install in 2 shell levels, ${{ matrix.has-nvmrc }}
+        if: ${{ matrix.shell-level == '2 shlvls' }}
+        run: |
+          if [ '${{ matrix.has-nvmrc }}' == 'nvmrc' ]; then
+            bash -c "set -ex && . $NVM_DIR/nvm.sh && echo nvm.sh sourced && nvm --version && nvm install"
+          else
+            bash -c "set -ex && . $NVM_DIR/nvm.sh && echo nvm.sh sourced && nvm --version"
+          fi
+
+  finisher:
+    runs-on: ubuntu-latest
+    needs: [test]
+    steps:
+      - run: true
diff --git a/nvm.sh b/nvm.sh
index e7f97cb..cf96950 100755
--- a/nvm.sh
+++ b/nvm.sh
@@ -4556,31 +4556,41 @@ nvm_supports_xz() {
 nvm_auto() {
   local NVM_MODE
   NVM_MODE="${1-}"
-  local VERSION
-  local NVM_CURRENT
-  if [ "_${NVM_MODE}" = '_install' ]; then
-    VERSION="$(nvm_alias default 2>/dev/null || nvm_echo)"
-    if [ -n "${VERSION}" ] && ! [ "_${VERSION}" = '_N/A' ] && nvm_is_valid_version "${VERSION}"; then
-      nvm install "${VERSION}" >/dev/null
-    elif nvm_rc_version >/dev/null 2>&1; then
-      nvm install >/dev/null
-    fi
-  elif [ "_$NVM_MODE" = '_use' ]; then
-    NVM_CURRENT="$(nvm_ls_current)"
-    if [ "_${NVM_CURRENT}" = '_none' ] || [ "_${NVM_CURRENT}" = '_system' ]; then
-      VERSION="$(nvm_resolve_local_alias default 2>/dev/null || nvm_echo)"
-      if [ -n "${VERSION}" ] && ! [ "_${VERSION}" = '_N/A' ] && nvm_is_valid_version "${VERSION}"; then
-        nvm use --silent "${VERSION}" >/dev/null
-      elif nvm_rc_version >/dev/null 2>&1; then
-        nvm use --silent >/dev/null
+
+  case "${NVM_MODE}" in
+    none) return 0 ;;
+    use | install)
+      local VERSION
+      local NVM_CURRENT
+      NVM_CURRENT="$(nvm_ls_current)"
+      if [ "_${NVM_CURRENT}" = '_none' ] || [ "_${NVM_CURRENT}" = '_system' ]; then
+        VERSION="$(nvm_resolve_local_alias default 2>/dev/null || nvm_echo)"
+        if [ -n "${VERSION}" ]; then
+          if [ "_${VERSION}" != '_N/A' ] && nvm_is_valid_version "${VERSION}"; then
+            if [ "_${NVM_MODE}" = '_install' ]; then
+              nvm install "${VERSION}" >/dev/null
+            else
+              nvm use --silent "${VERSION}" >/dev/null
+            fi
+          else
+            return 0
+          fi
+        elif nvm_rc_version >/dev/null 2>&1; then
+          if [ "_${NVM_MODE}" = '_install' ]; then
+            nvm install >/dev/null
+          else
+            nvm use --silent >/dev/null
+          fi
+        fi
+      else
+        nvm use --silent "${NVM_CURRENT}" >/dev/null
       fi
-    else
-      nvm use --silent "${NVM_CURRENT}" >/dev/null
-    fi
-  elif [ "_${NVM_MODE}" != '_none' ]; then
-    nvm_err 'Invalid auto mode supplied.'
-    return 1
-  fi
+    ;;
+    *)
+      nvm_err 'Invalid auto mode supplied.'
+      return 1
+    ;;
+  esac
 }
 
 nvm_process_parameters() {