Thick plumes of smoke rose over a SpaceX facility in Florida during a test fire of a Crew Dragon spacecraft and the issue was serious, it could derail plans to fly astronauts aboard the capsule later this year, the media reported.
SpaceX, which was founded by billionaire businessman Elon Musk in 2002, said the craft was undergoing a "series of engine tests" at a facility in Cape Canaveral on Saturday, and something went wrong during the final stretch, CNN reported.
SpaceX Dragon spacecraft with 6,000 pound of re-supply mission launched to International Space Station
SpaceX will work with NASA to determine what caused the issue. No injuries were reported.
"Ensuring that our systems meet rigorous safety standards and detecting (issues) like this prior to flight are the main reasons why we test," SpaceX said in a statement.
Crew Dragon is already overdue and more delays could make things tricky for NASA.
It was scheduled to conduct a key test of its emergency abort system in June. And its first crewed mission, which will carry astronauts Doug Hurley and Bob Behnken, was slated for July, though NASA recently said that timeline was under review.
The US has not had the technology to fly humans to orbit since the space shuttle programme ended in 2011. Meanwhile, NASA has paid Russia about $80 million per seat to send astronauts to the International Space Station aboard Soyuz capsules.
NASA has also decided to ask the private sector to design and build a new generation of spacecrafts.
SpaceX and Boeing, which is building a vehicle called Starliner, were awarded contracts worth up to $2.6 billion and $4.2 billion, respectively, in 2014. Both capsules were supposed to start flying in 2017, but they have been hampered with delays.
Federal oversight authorities warned NASA last year that more delays could leave US astronauts stranded if the new capsules were not ready to fly in 2019.