Regulators target Tesla’s self-driving marketing
California regulators are moving toward suspending Tesla’s license to sell vehicles in the state after concluding that the company overstated the capabilities of its self-driving technology. The action follows a ruling by an administrative law judge who found that Tesla’s long-standing use of the terms “Autopilot” and “Full Self-Driving” misled consumers about how autonomous its vehicles really are.
Possible 30-day sales suspension in early 2026
The California Department of Motor Vehicles is considering a penalty that would temporarily block Tesla from selling cars in the state for up to 30 days. Regulators stopped short of suspending Tesla’s manufacturing license at its Fremont plant, but warned that sales restrictions could still be imposed if corrective steps are not taken.
Tesla has been given a 90-day period to revise its marketing and disclosures to more clearly explain that its self-driving features require active human supervision. State officials say similar changes have already been implemented by other automakers offering advanced driver-assistance systems.
Tesla pushes back on ruling
Tesla dismissed the decision as excessive regulation, arguing that no consumers have formally complained about its branding. The company maintains that its owner’s manuals and on-screen warnings clearly state that drivers must remain attentive at all times when using Autopilot or Full Self-Driving features.
Despite the regulatory threat, Tesla insists its California operations will continue uninterrupted while the review process plays out.
Sales pressure and legal scrutiny persist
The dispute comes as Tesla faces slowing vehicle demand, rising competition, and reputational fallout linked to CEO Elon Musk’s political activity. Global deliveries have declined year over year, even as the company refreshes key models and rolls out lower-cost variants.
At the same time, Tesla’s self-driving claims have drawn growing legal scrutiny. Courts and regulators have repeatedly questioned whether the company’s marketing created unrealistic expectations, with some cases linking the technology to fatal crashes. While Tesla has defended or settled many lawsuits, a recent jury verdict found the company partially liable in a deadly accident involving Autopilot.
Investors focus on AI and robotaxi ambitions
Even as car sales weaken, Tesla’s share price has remained resilient, reflecting investor optimism around its artificial intelligence strategy. Musk continues to position self-driving technology and future robotaxi networks as central to Tesla’s long-term value, with limited testing already underway in Texas.
California regulators, however, signal that progress in autonomy will need to be matched by clearer communication to consumers about the technology’s real-world limits.
