The vehicles were recalled because the font size on a warning lights panel was too small. Tesla will address the issue with a software update.
The company’s board of directors will now decide whether to appeal the decision, change where Tesla is incorporated or negotiate a new pay package.
Shareholders had sued, arguing that Mr. Musk’s compensation — which helped make him the world’s richest person — was excessive.
Hefei has led the country in making electric vehicles and other tech products, but it still has not escaped a nationwide housing crisis.
Shares in Elon Musk’s electric vehicle maker fell sharply after the company delivered lackluster quarterly results and declined to give full-year guidance.
Quarterly earnings soared from a year earlier after the company booked a tax benefit, but increased competition and a price war took a toll, the electric-car maker said.
In freezing temperatures, the batteries of electric vehicles can be less efficient and have shorter range, a lesson many Tesla drivers in Chicago learned this week.
Elon Musk, the electric car company’s chief executive, said he would “build products outside of Tesla” unless the board raises his stake to 25 percent.
The rental car company blamed the sharp drop in the value of electric vehicles and higher repair costs for its decision to sell 20,000 cars.
The recall follows a similar move by the company in the United States to upgrade the cars’ Autopilot feature.