Elon Musk’s Tesla faces penalties after judge flags deceptive Autopilot claims

A California administrative law judge ruled earlier this month that Tesla misled consumers through its marketing of Autopilot and Full Self-Driving features, setting off a regulatory response that could temporarily halt the company’s ability to sell cars in the state.

The decision was formally adopted on Tuesday when the California Department of Motor Vehicles announced modified penalties following a press conference by its leadership. The ruling comes as scrutiny over automated driving claims intensifies across the US.

Judge flags misleading autonomy claims

The case traces back to 2022, when the California DMV accused Tesla of false advertising. Regulators argued that the company’s descriptions of its Autopilot and Full Self-Driving systems implied vehicles could operate autonomously, even though drivers were required to remain alert and ready to intervene at all times.

In the proposed order, the administrative law judge said the terminology itself created a false impression for buyers. “A reasonable consumer likely would believe that a vehicle with Full Self-Driving Capability can travel safely without a human driver’s constant, undivided attention,” the judge wrote.

“This belief is wrong — both as a technological matter and as a legal matter — which makes the name Full Self-Driving Capability misleading,” a violation of both civil and vehicle codes in California.

Since the accusations were filed, the company has renamed its premium driver assistance package to Full Self-Driving (Supervised), a change regulators say acknowledges the need for clearer messaging.

DMV offers chance to correct marketing

On Tuesday, DMV Director Steve Gordon said the agency adopted the judge’s order but adjusted the penalty to give Tesla time to address the issues. Under the revised decision, Tesla has 60 days to fix any deceptive or confusing claims related to Autopilot and Full Self-Driving.

If the company fails to resolve the concerns within that window, the DMV will proceed with a 30-day suspension of the automaker’s license to sell vehicles in California. 

Gordon added that the agency will stay the portion of the order that would have suspended the manufacturer’s license. That means factory operations in the state will continue without interruption.

The DMV said its action is focused on consumer protection rather than operational punishment, emphasizing that accurate marketing is critical as advanced driver assistance systems become more common.

Tesla pushes back on consumer harm

The automaker responded through its public relations firm, FGS Global, pushing back on the ruling’s significance. 

“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 statement said.

The DMV confirmed that its accusations were not based on individual consumer complaints. Instead, the case centered on how a reasonable consumer might interpret Tesla’s advertising language when evaluating the technology’s capabilities.

Legal and market pressures grow

Despite the lack of cited complaints in the DMV case, the electric vehicle company faces a separate class action lawsuit in California’s Northern District. Drivers involved in that suit claim the company misled them for years about the true capabilities of its self-driving features.

The regulatory development arrived on the same day the company’s stock closed at a record high. 

Investor optimism has been fueled by growing enthusiasm around the company’s plans for Robotaxis and future driverless technology championed by CEO Elon Musk.

The contrast highlights a growing tension between market excitement and regulatory caution as autonomous driving moves closer to everyday roads.