Tesla shares jump after SEC settlement leaves Musk as CEO

Workers assembled Model 3s in a tent at Tesla's factory in Fremont Calif. earlier this year. Tesla said Tuesday that it produced 80,142 cars in the third quarter a 50 percent rise from the second quarter

Tesla CEO Elon Musk urged employees to "go all out" in the final day of the third quarter, as the electric-car maker pushed to meet ambitious production goals for the Model 3.

The deal with the powerful Securities and Exchange Commission, will require Musk to stand down as chairman, and cede sovereignty over his Twitter activities, and for both Tesla and Musk to pay $US20 million fines.

Musk, whose tweets on August 7 on a plan to take Tesla private that was later abandoned, has been barred from tweeting about Tesla without the permission of a company lawyer. Some have argued Musk should even give up the CEO role and assume a post such as chief technical officer.

The settlement comes just two days after the SEC sued Musk for fraud and sought to block the way of entrepreneur from running affairs of Tesla or any other publicly-traded company.

Initially, Musk was ready to accept SEC's proposed settlement that stipulated he would step down as chairman for two years and pay between $5-10 million as a fine.

Tesla jumped as much as 19% to $315.45 at 7:45 am NY time, more than enough to offset Friday's 14% plunge.

Model 3 production, while impressive, is still also far below the target Tesla set itself in its Q2 investor update.

And in a September 30 email to employees that was filed with the SEC on Monday, Musk said the company was "very close to achieving profitability and proving the naysayers wrong". Since starting the production of the electric sedan previous year, the Model 3 ramp has been beset by multiple challenges, including bottlenecks in both the Fremont factory and Gigafactory 1. The second is a series of class-action lawsuits filed by investors who say they lost money due to the market volatility after Musk's statements.

Musk will reportedly buy $20 million worth of Tesla's stock at the next trading opportunity, according to a Bloomberg report, citing a person familiar with the matter.

Musk will need to step down as the Chairman of Tesla. Musk is Tesla's largest investor, holding a 20-percent stake in the company.

Stephanie Avakian, the co-director of the SEC's enforcement division, said: "The total package of remedies and relief are specifically created to address the misconduct at issue by strengthening Tesla's corporate governance and oversight in order to protect investors".

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