Elon Musk resigns as Tesla chairman with multi-million dollar settlement

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Tesla jumped in pre-market trading after Elon Musk settled a USA lawsuit over his take-private tweet storm, reassuring investors that the billionaire will keep calling the shots at the electric-car maker he's said is on the verge of profitability.

The electric carmaker's shares sank last week after the U.S. Securities and Exchange Commission accused Musk of securities fraud and sought to ban him from company leadership, pointing to a long drawn-out fight that could have undermined Tesla's operations and ability to raise capital.

The stock's somewhat muted reaction may be a reminder of the position in which Tesla now sits-just past a trying period in which CEO Elon Musk agreed to step aside as chairman to settle an SEC lawsuit, and ahead of its third quarter financial results.

Two new independent directors will be appointed to the board and a new committee of independent directors will be expected to put in place additional controls and procedures to oversee Musk's communications. Musk is Tesla's largest investor, holding a 20-percent stake in the company. He is staying on as CEO, but gives up his chairmanship.

Electrek, a website focusing on the electric-vehicle industry and particularly on Tesla's offerings, quoted an unnamed source as saying production levels reached an unprecedented level of roughly 80,000 for the third quarter.

He told his 22 million Twitter followers on 7 August that he might take Tesla private at $420 per share and that there was "funding secured".

In the immediate aftermath of the "funding secured" tweet, Tesla stock rose by six per cent.

In a letter to employees, Musk said Tesla's volatile stock has served as a "major distraction" to staff and that being public created a lot of pressure on the company to 'make decisions that may be right for a given quarter, but not necessarily right for the long-term'. Musk tweeted only once since the settlement was announced - posting a music video by rap group Naughty by Nature. The SEC sued Musk last week, claiming he had deceived investors by claiming in a tweet that he had secured financing to go private. An equity settlement could end up diluting Musk's roughly 19 percent stake in Tesla, further reducing his influence on the board.

"The real worry for the company is not the SEC but private actions that follow a settlement like this", said Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.