California threatens Tesla with 30-day suspension of sales license for deceptive self-driving claims

California regulators are threatening to suspend Tesla’s license to sell electric cars in the state for 30 days unless the company changes how it markets its self-driving technology, following a judge’s ruling that the automaker has misled consumers about the capabilities of its autonomous features.

Administrative Law Judge Juliet Cox determined that Tesla engaged in deceptive marketing practices by using the terms “Autopilot” and “Full Self-Driving” to promote technology that does not actually provide fully autonomous driving. The ruling came after five days of hearings in Oakland this July.

While Cox also recommended suspending Tesla’s manufacturing license at its Fremont plant, California regulators indicated they won’t implement that portion of the proposed penalty. Instead, Tesla has been given a 90-day window to make changes that more clearly convey the limitations of its self-driving technology to avoid the sales suspension.

“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,” said Steve Gordon, director of the California Department of Motor Vehicles.

The company has already made one significant change since California regulators filed their action in 2023, adding wording that clarifies its Full Self-Driving package still requires human supervision.

Tesla responded dismissively to the ruling in a post on X, Elon Musk’s social media platform: “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. Sales in California will continue uninterrupted.”

The regulatory challenge comes at a difficult time for Tesla, which has been struggling with declining demand globally. The company’s sales have decreased by 9% during the first nine months of this year compared to 2023. Market analysts attribute this downturn to increased competition from other electric vehicle manufacturers and Tesla’s aging vehicle lineup, though the company has recently revamped its bestselling Model Y and introduced less-expensive versions of the Model Y and Model X.

Despite these challenges, Tesla’s stock reached an all-time high of $495.28 in early trading Wednesday before retreating below $470 later in the day. This stock performance reflects investors’ growing interest in Musk’s efforts to develop artificial intelligence technology for humanoid robots and a fleet of self-driving Teslas that would operate as robotaxis.

The robotaxi concept, which Musk has promised for years without delivering, began testing in Austin earlier this year with human supervisors present. Recently, Musk announced that Tesla had started testing robotaxis without safety monitors in the vehicles.

California regulators join a chorus of critics who have accused Tesla of exaggerating its self-driving technology’s capabilities in potentially dangerous ways. The company has maintained that information in its vehicle owner’s manuals and on its website clearly states that human supervision is still required with its self-driving technology. However, the judge cited as evidence a 2020 video showing a Tesla purportedly driving on its own, which remained on the company’s website for nearly four years.

Tesla has faced numerous lawsuits alleging that misrepresentations about its self-driving technology created a false sense of security that resulted in fatal accidents. While the company has settled or prevailed in several cases, a Miami jury earlier this year found Tesla partly responsible for a lethal crash in Florida that occurred with Autopilot engaged and ordered the automaker to pay more than $240 million in damages.

The California DMV’s action represents one of the most significant regulatory challenges yet to Tesla’s marketing practices and could impact how autonomous driving features are advertised across the industry.