A Rare Regulatory Warning
California regulators have issued an unusual warning to Tesla, telling the automaker it risks losing its ability to sell vehicles in the state if it doesn’t change how it markets its driver-assistance systems. The California Department of Motor Vehicles has ordered Tesla to revise advertising language tied to its “Autopilot” and “Full Self-Driving Capability” branding, arguing the names mislead consumers into believing the vehicles can drive themselves.
What the Order Requires
The order follows a court ruling last month that found Tesla’s advertising practices violated state law. Tesla now has 90 days to revise its marketing. If it fails to comply, the DMV says it could suspend Tesla’s license to sell vehicles in California, one of the automaker’s largest markets, for 30 days.
The Core Dispute Over Branding
State officials argue that terms like “Autopilot” and “Full Self-Driving” imply a level of autonomy the systems don’t actually deliver, since drivers are still required to stay seated, remain alert, and be ready to take control at any moment. Some Tesla owners have echoed similar concerns, describing the features as enjoyable to use but far from equivalent to a truly driverless system.
Tesla Pushes Back
Tesla has disputed the DMV’s action, calling it excessive and saying it expects sales in California to continue without interruption. The company maintains that its owner’s manuals and online materials already make clear that human supervision is required at all times while using these features.
The Backdrop: Slowing Sales and Political Headwinds
The warning comes as Tesla contends with a broader sales slowdown, driven by rising competition, an aging vehicle lineup, and backlash connected to CEO Elon Musk’s political activity. Despite refreshing the Model Y and introducing lower-priced variants, Tesla reported auto sales down 9% through the first nine months of the year. Even so, the company’s stock briefly hit a record high in early trading before pulling back, as investors continue to focus more on Musk’s ambitions in artificial intelligence, robotics, and robotaxi development than on current vehicle sales figures.
Robotaxi Expansion Continues Amid Legal Scrutiny
Tesla has already begun limited robotaxi testing in Texas, initially with human safety monitors on board, and has since disclosed early testing without a safety monitor present. Regulators and courts have continued scrutinizing the company’s autonomy-related claims, particularly following lawsuits over crashes involving Autopilot. Earlier this year, a Florida jury found Tesla partially responsible for a fatal crash and ordered the company to pay more than $240 million in damages, a case that has fueled additional pressure for stricter oversight of how the technology is marketed.
What California Says Is at Stake
California officials frame the advertising order as a consumer protection and roadway safety measure, arguing that clearer marketing could reduce driver overconfidence in systems that still require full human attention. The dispute adds to a growing list of legal and regulatory challenges facing Tesla as scrutiny of self-driving technology claims intensifies nationwide.