California Regulators Move Against Tesla’s Marketing Practices
California regulators have threatened to temporarily suspend Tesla’s licence to sell vehicles in the state, escalating a long-running dispute over how the electric carmaker markets its self-driving technology. The warning follows a ruling by an administrative law judge who concluded that Tesla misled consumers about the capabilities of its Autopilot and Full Self-Driving (FSD) systems.
The proposed penalty includes a 30-day blackout on Tesla vehicle sales in California, one of the company’s most important US markets. The recommendation was issued by the state’s Department of Motor Vehicles (DMV) and could take effect early next year if Tesla fails to comply.
Judge Finds Tesla’s Language Deceptive
Administrative Law Judge Juliet Cox ruled that Tesla’s long-standing use of terms such as “Autopilot” and “Full Self-Driving” created a misleading impression that its vehicles are capable of operating autonomously without human oversight.
After five days of hearings held in Oakland, California, Cox concluded that Tesla’s marketing overstated the technology’s capabilities and could encourage drivers to place undue trust in systems that still require constant human supervision.
The judge also recommended suspending Tesla’s licence to manufacture vehicles at its Fremont factory, though state regulators have indicated they will not pursue that portion of the penalty.
Tesla Given 90 Days to Make Changes
Under the DMV’s recommendation, Tesla has 90 days to revise its marketing and disclosures to more clearly explain the limits of its driver-assistance technology. Failure to do so could trigger the temporary suspension of sales.
Steve Gordon, director of the California DMV, said Tesla could easily avoid the penalty by adopting clearer language already used by other automakers:
“Tesla can take simple steps to pause this decision and permanently resolve this issue — steps autonomous vehicle companies and other automakers have been able to achieve.”
Tesla has already made some changes since California first filed its case in 2023, including adding clearer warnings stating that Full Self-Driving still requires active driver supervision.
Tesla Pushes Back, Calls Ruling Overreach
Tesla dismissed the regulator’s decision as excessive and politically motivated. In a statement posted on Elon Musk’s X platform, the company said:
“This was a ‘consumer protection’ order about the use of the term ‘Autopilot’ in a case where not one single customer came forward to say there’s a problem. Sales in California will continue uninterrupted.”
Tesla maintains that its owner’s manuals and online documentation clearly explain the limitations of its technology, despite marketing materials and promotional videos that regulators say contradict those warnings.
Broader Pressure on Tesla’s Business
The regulatory threat comes amid a challenging period for Tesla. The company has faced a global slowdown in demand, intensified competition from other electric vehicle makers, and reputational damage linked to Musk’s high-profile political involvement in Washington.
Tesla’s sales have fallen 9 percent from 2024 through the first nine months of 2025, despite refreshed versions of the Model Y and new lower-priced variants of the Model Y and Model X.
Stock Market Resilience Despite Sales Slump
Despite declining vehicle sales and the looming California action, Tesla’s stock surged to a record high of $495.28 during early trading on Wednesday before retreating later in the session. Shares remain slightly above levels seen before Musk’s controversial stint in the Trump administration.
Investors appear increasingly focused on Tesla’s long-term ambitions, including artificial intelligence development, humanoid robotics, and Musk’s long-promised robotaxi network.
Self-Driving Technology Still Under Scrutiny
Tesla has faced repeated criticism from regulators, safety experts, and courts over claims about its autonomous driving capabilities. A 2020 promotional video depicting a Tesla driving itself — later cited as evidence in the California case — remained online for nearly four years despite internal disclaimers.
The company has also been the subject of multiple lawsuits alleging that misleading claims about Autopilot contributed to serious or fatal crashes. While Tesla has settled or prevailed in several cases, a Miami jury earlier this year found the company partly responsible for a fatal crash, awarding more than $240 million in damages.
Conclusion
California’s threat to suspend Tesla’s sales underscores growing regulatory scrutiny of autonomous driving technology and how it is marketed to consumers. While Tesla continues to defend its branding and push ahead with robotaxi testing, regulators argue that clearer communication is essential to prevent dangerous misunderstandings about what today’s self-driving systems can — and cannot — do.
The outcome of the California DMV decision could set a precedent for how autonomous vehicle claims are regulated nationwide, with significant implications for Tesla and the wider automotive industry.
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