An administrative law judge has determined that Tesla engaged in misleading marketing practices regarding its Autopilot and Full Self-Driving driver assistance software. This ruling represents a significant development in a protracted case instigated by California’s Department of Motor Vehicles (DMV).
The judge supported the DMV’s request to impose a 30-day suspension on Tesla sales as a penalty. However, the DMV has put this order on hold for 60 days, allowing Tesla time to adjust or eliminate any misleading language. The judge also suggested the suspension of Tesla’s manufacturing license for the same period, although this recommendation has also been stayed by the DMV.
DMV director Steve Gordon emphasized that the decision demonstrates the agency’s commitment to holding all vehicle manufacturers to rigorous safety standards, which are crucial for the protection of California’s drivers, passengers, and pedestrians. He stated that Tesla could easily take steps to mitigate this situation and resolve the issue permanently, noting that other autonomous vehicle companies have succeeded in doing so within California’s innovative regulatory landscape.
In response, Tesla communicated via a post on X that sales in California would continue without interruption. The company called the ruling a “consumer protection” order focused on the term ‘Autopilot,’ pointing out that no customers had reported any issues.
After the two-month window, Tesla retains the option to appeal the decision. If Tesla complies with the DMV’s directives, including reevaluating its use of the term “autopilot,” the proposed suspensions would be lifted. However, the specifics of the actions the DMV expects Tesla to undertake remain unclear. The agency did not immediately respond to inquiries regarding its expectations or Tesla’s possible plans to disregard the ruling.
Tesla’s marketing practices have been under scrutiny by California’s Attorney General, the Department of Justice, and the Securities and Exchange Commission due to similar allegations of misleading customers about the capabilities of its semi-autonomous systems. The company has also faced numerous personal civil lawsuits connected to accidents involving its Autopilot technology, many of which have been settled.
The case against Tesla, lodged by the DMV, has been progressing through the Office of Administrative Hearings for years. The DMV accused the company of leading customers to believe that its advanced driver assistance systems were capable of high levels of autonomy, fostering overconfidence that may have contributed to numerous accidents and fatalities. Tesla has contested these allegations, framing its marketing as protected speech.
A temporary ban on sales in California could significantly impact Tesla, as the state remains its largest market in the U.S. Additionally, a suspension of manufacturing operations could prove detrimental. While Tesla has invested in a new factory in Austin, Texas, it continues to depend on its Fremont facility in California for the production of hundreds of thousands of vehicles, including the Model 3 sedans destined for the North American market.
This ruling comes at a crucial time for Tesla, as the company progresses with its Robotaxi service testing in Austin. Recently, Tesla removed safety monitors from its fleet operating in the area. For the past six months, these vehicles have provided rides to customers with either a driver or passenger monitoring the safety. CEO Elon Musk indicated that these vehicles operate on a different version of Tesla’s driving software than what is available to consumers.
The situation remains fluid as Tesla navigates the regulatory landscape and considers its next moves in response to the DMV’s findings.
