California DMV to Halt Tesla Sales Over Autopilot Concerns

California's Tesla Dealerships Face Potential Sales Suspension

California’s Tesla dealerships are now facing a potential 30-day sales suspension if the company fails to address concerns over its use of the term "Autopilot" in marketing. The California Department of Motor Vehicles (DMV) has issued a warning to Tesla, stating that the carmaker must correct what it calls "misleading" branding or risk being blocked from selling vehicles in the state.

DMV Director Steve Gordon announced on Tuesday that an administrative judge had recommended the suspension, and the DMV has given Tesla 90 days to comply with the requirements. “We want to give them a chance,” Gordon said, adding, “you could argue, one more chance, to be able to remedy the situation.” While the judge also suggested a manufacturing pause, Gordon stated that the DMV is not enforcing that measure.

The decision comes after a long-standing legal dispute between the DMV and Tesla. The agency claims that Tesla should not use terms like "Autopilot" or "Full Self-Driving" in advertising, as they may mislead customers into believing the vehicles are fully autonomous. In contrast, Tesla maintains that its driver-assistance technology is not intended to imply full autonomy.

The recent order specifically targets the term "Autopilot," which Tesla has largely moved away from in favor of "Full Self-Driving" and "Full Self-Driving (Supervised)." According to the DMV, Tesla must either upgrade its technology to achieve true autonomy or stop using the term "Autopilot" altogether. The order requires Tesla to provide a statement confirming that it has taken one of these actions.

Tesla has already begun shifting its marketing materials away from the word "Autopilot" and has removed some webpages related to the feature. However, not all references have been eliminated.

On the call, Gordon emphasized the importance of avoiding misleading marketing language. He noted that Tesla’s driver-assistance features can steer, brake, and navigate a vehicle, but drivers are expected to remain ready to take control at any time.

Despite the DMV’s announcement, Tesla’s stock price closed at an all-time high on the same day, driven by the company’s testing of its new Robotaxi service in Austin without a driver. However, the stock briefly dropped by about 2% following the DMV’s news before partially recovering.

If the sales suspension were to go into effect, the DMV would not prevent Californians from purchasing Tesla vehicles out of state and bringing them back, Gordon told DISCOVERTREND. He added that, given Tesla’s significant investment in the state and its substantial sales volume, he expects the company to comply with the order.

“It would certainly be more efficient for Tesla to be in compliance and just continue to sell,” Gordon said. “They have a huge footprint, I mean, 70-plus dealers in the state of California.”

Key Points from the DMV Order

• The DMV has given Tesla 90 days to address the issue of "Autopilot" branding.
• The order focuses on the term "Autopilot," which Tesla has largely replaced with other terminology.
• Tesla must either upgrade its technology to achieve full autonomy or stop using the term "Autopilot."
• The DMV is not enforcing a manufacturing pause, though it was initially recommended.
• The DMV believes Tesla will comply due to its significant presence in California.

Impact on Tesla and the Market

Despite the potential sales suspension, Tesla remains a dominant player in the automotive market. Its recent advancements, such as the Robotaxi service, have contributed to its strong stock performance. However, the DMV’s actions highlight the ongoing regulatory challenges that even the most innovative companies face.

As the situation unfolds, the outcome of this dispute could set a precedent for how other automakers approach the use of marketing terms related to driver-assistance technology.

Work at a Bay Area tech company and want to talk? Contact tech reporter Stephen Council securely at stephen.council@DISCOVERTREND or on Signal at 628-204-5452.

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