Tesla’s branding just hit a regulatory speed bump in its most important US market.
California’s Department of Motor Vehicles ruled Tuesday that Tesla $TSLA ( ▼ 4.62% ) violated state law by marketing its driver-assistance systems using terms regulators say overpromise what the technology can actually do. Specifically, the DMV found that names like “Autopilot” and “Full Self-Driving Capability” misled consumers into thinking the cars were far more autonomous than they really are.
Autopilot gets grounded
The ruling adopts findings from an administrative law judge but stops short of the harshest penalties. Instead of suspending Tesla’s manufacturing license outright, the DMV is giving the company 60 days to revise how it uses the term “Autopilot” in marketing and sales materials.
If Tesla fails to comply, the agency could bar the company from selling vehicles in California for 30 days. That would be a meaningful hit, given the state is Tesla’s largest US market.
Why regulators stepped in
According to the DMV, Tesla’s marketing crossed the line by implying near full autonomy. Regulators pointed to claims that the system could handle “short and long-distance trips with no action required by the person in the driver’s seat,” despite the fact that the technology still requires constant human supervision.
“Vehicles equipped with those ADAS features could not at the time of those advertisements, and cannot now, operate as autonomous vehicles,” the agency wrote.
This case has been building for a while. After the DMV filed accusations in November 2023, Tesla dropped the term “Full Self-Driving Capability” and rebranded it as “Full Self-Driving (Supervised).” Now, California says “Autopilot” needs a rethink too.
An awkward moment for Tesla’s autonomy push
The timing is uncomfortable for Tesla. The company is currently testing Robotaxis in Austin using versions of its Full Self-Driving software without safety monitors, part of CEO Elon Musk’s push toward fully autonomous ride-hailing.
California’s ruling does not directly affect those tests, but it underscores a growing gap between Tesla’s autonomy ambitions and how regulators view the current state of the technology. For now, Tesla can keep selling cars. It just has to call its software something that sounds a little less like science fiction.