An administrative law judge has ruled that Tesla engaged in deceptive marketing that gave customers a false impression of the capabilities of its Autopilot and Full Self-Driving driver assistance software, a pivotal development in a years-long case initiated by California’s Department of Motor Vehicles.
The judge agreed with the state DMV’s request to suspend Tesla sales for 30 days as a penalty for its actions, but the DMV stayed the order and is giving Tesla 60 days to modify or remove any deceptive language before implementing the suspension, according to multiple outlets. The judge also recommended suspending Tesla’s manufacturing license for 30 days, but the DMV stayed that order, too, according to Bloomberg News.
“The DMV’s decision today confirms that the department will hold every vehicle manufacturer to the highest safety standards to keep California’s drivers, passengers and pedestrians protected,” DMV director Steve Gordon said in a statement. “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 in California’s nation-leading and supportive innovation marketplace.”
Tesla said in a post on X that: “Sales in California will continue uninterrupted.”
“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,” the company wrote.
After the 60-day window, Tesla can appeal the decision and should Tesla comply, the suspensions will be dropped. But it’s not immediately clear what steps the DMV wants Tesla to take, beyond telling the company to “take action regarding its use of the term ‘autopilot.’” The DMV did not immediately respond to a request for clarification, or to a request regarding Tesla’s apparent plan to ignore the decision.
Tesla has faced multiple investigations from the California Attorney General, the Department of Justice, and the Securities and Exchange Commission over similar allegations that its marketing around partial autonomy systems was misleading. The company has also faced (and now settled) a number of personal civil lawsuits over crashes involving its Autopilot technology.
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The case brought by the CA DMV has been winding through the state’s Office of Administrative Hearings for years. The agency essentially accused Tesla of making customers believe that its advanced driver assistance systems were capable of high levels of autonomy. This led to overconfidence in the systems, the DMV alleged, which has contributed to dozens of crashes and multiple deaths. Tesla refuted these claims by saying its marketing was protected speech.
A shutdown of sales in California, even temporary, could have a major impact on Tesla’s business as it remains the company’s largest market in the United States. A manufacturing suspension could also hurt Tesla’s business. While the company has constructed a massive factory in Austin, Texas (and moved its official headquarters to the same location), it still relies on its Fremont, California factory to make hundreds of thousands of vehicles, including all North American-bound Model 3 sedans.
The judge’s decision comes at a moment when Tesla is advancing its Robotaxi service test in Austin. Over the weekend, the company removed the safety monitors from its small fleet in the city. It had been offering rides to customers in the city for the last six months, but with a safety monitor either in the driver’s or passenger’s seat. Those vehicles are running a different version of Tesla’s driving software than what the automaker’s customers have in their cars, CEO Elon Musk has said.
This story has been updated to include information from the DMV’s press release and Tesla’s response.
