Tesla’s share price plunged after the US financial regulator said Elon Musk should be held in contempt for violating a settlement over social media remarks.
The firm’s stock dropped by about 4 per cent in after-hours trading following the move by the Securities and Exchange Commission (SEC) on Monday.
A New York court was asked by the regulator to hold the billionaire CEO in contempt for violating a $40 million (£3.45 million) settlement he reached with the US stock market's chief regulatory agency five months ago.
The SEC alleged that Mr Musk broke the terms of the agreement with a tweet last week projecting that Tesla would make about 500,000 cars this year.
In court papers filed on Monday, the SEC said the tweet was inaccurate and in breach of Mr Musk's agreement, noting that the post was disseminated to more than 24 million people.
Mr Musk had corrected the tweet about four after posting it, saying he meant that Tesla had started to manufacture cars at a weekly clip that would translate into 500,000 cars during a year-long period, but not necessarily for calendar 2019.
Allegations that Mr Musk, also boss of private rocket firm SpaceX, broke the agreement by tweeting without company approval could renew a debate about whether he has become too reckless to continue as Tesla's CEO.
The settlement followed his tweets in August about taking Tesla private.
Tesla didn't immediately respond to requests for comment about the SEC's latest move, but letters from the company's attorneys included in Monday's filing argue that Musk remains in compliance with the settlement.
Mr Musk had acknowledged he did not get company approval for the initial tweet on February 19, according to the SEC, even though car manufacturing statistics can affect stock prices of automakers.
In his defense, Mr Musk said he did not think his tweet needed clearance because he was basing it on information that had been disclosed in late January.
Agencies contributed to this report
