California threatens Tesla with 30-day suspension of sales license for deceptive self-driving claims
SAN FRANCISCO– California regulators are threatening to suspend Tesla’s license to sell its electric cars in the state early next year unless the automaker tones down its marketing tactics for its self-driving features after a judge found the Elon Musk-led company misled consumers about the technology’s capabilities.
The potential 30-day ban on Tesla sales in California is the main sanction recommended to the state Department of Motor Vehicles in a ruling released Tuesday evening. Administrative Judge Juliet Cox’s ruling determined that Tesla engaged in deceptive marketing practices for years by using the terms “autopilot” and “fully autonomous driving” to promote the autonomous technology available in many of its cars.
After presiding over five days of hearings held in Oakland, California, in July, Cox also recommended suspending Tesla’s license to make cars at its factory in Fremont, California. But California regulators are not going to impose this part of the sanction proposed by the judge.
Tesla will have 90 days to make changes that more clearly outline the limits of its self-driving technology to avoid the suspension of its sales license in California. After California regulators filed suit against Tesla in 2023, the Austin, Texas, company has already made a significant change by including language making clear that its fully autonomous driving package still required supervision from a human driver during its deployment.
“Tesla can take simple steps to put this decision on hold and permanently resolve this issue – steps that autonomous vehicle makers and other automakers have been able to take,” said Steve Gordon, director of the California Department of Motor Vehicles.
Tesla did not immediately respond to a request for comment Wednesday.
The automaker has already been plagued by a global slowdown in demand that began during a backlash to Musk’s high-level role in overseeing cuts to the U.S. government’s budget, overseeing the government department created by President Donald Trump during his administration. Increased competition and an older vehicle lineup have also weighed on Tesla’s sales, even as the company revamped its Model Y, the world’s best-selling vehicle, and unveiled cheaper versions of the Model Y and Model X.
Although Musk left Washington after a spat with Trump, the fallout continued to weigh on Tesla’s auto sales, which declined 9% between 2024 and the first nine months of this year.
Despite the crisis and the threat of sales suspension in California, Tesla’s stock price reached an all-time high of $495.28 early in Wednesday’s session, before later returning to fall below $470. Despite this reversal, Tesla shares are still worth quite a bit more than they were before Musk’s ill-fated stint in the Trump administration — a “pretty successful” assignment that he recently said he wouldn’t resume.
The performance of Tesla shares amid eroding auto sales reflects the growing importance investors place on Musk’s efforts to develop artificial intelligence technology to be implemented in humanoid robots and a fleet of self-driving Teslas that will operate as robo-taxis across the United States.
Musk has been promising for years that Tesla’s self-driving technology would meet his robotaxi vision without delivering on his promise, but the company finally began testing the concept in Austin earlier this year, albeit with a human supervisor in the car to take over if something goes wrong. Just a few days ago, Musk revealed that Tesla had begun testing its robotaxis without a safety monitor in the vehicle.
California regulators are far from the first to accuse Tesla of exaggerating the capabilities of its self-driving technology in potentially dangerous ways. The company has steadfastly insisted that information in its vehicle’s owner’s manual on its website made clear that its self-driving technology still requires human supervision, even releasing a 2020 video showing one of its cars supposedly driving alone. The video, cited as evidence against Tesla in the decision recommending the suspension of the company’s California sales license, remained on its website for nearly four years.
Tesla has been the target of various lawsuits, alleging that its misinterpretations of self-driving technology lulled humans into a false sense of security that led to fatal accidents. The company has settled or won in several cases, but earlier this year a Miami jury held Tesla partly responsible for a fatal crash in Florida that occurred while Autopilot was deployed and ordered the automaker to pay more than $240 million in damages.
