Tesla will be temporarily unable to sell new electric vehicles in California for a month unless the carmaker led by billionaire Elon Musk changes what the state and a judge determined are deceptive marketing practices for its Autopilot and Full Self-Driving features.
Administrative Judge Juliet Cox ruled that the Austin-based company has for years misled buyers with regard to the level of automation Tesla’s currently have, leading them to think its vehicles are more capable of driving themselves than they really are, the Department of Motor Vehicles said in a statement. She recommended a 30-day sales and production suspension in California, Tesla’s biggest U.S. market, as punishment. The DMV isn’t immediately imposing the sales ban and instead said it’s given Tesla 60 days to modify marketing language for Autopilot and FSD. The agency said it doesn’t intend to suspend production at Tesla’s Fremont, California plant.
“The DMV’s decision today confirms that the department will hold every vehicle manufacturer to the highest safety standards to keep California’s drivers, passengers and pedestrians protected,” DMV Director Steve Gordon said in an emailed statement. “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 in California’s nation-leading and supportive innovation marketplace.”
Tesla didn’t immediately respond to a request for comment.
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The first of its kind in the U.S. move comes months after hearings in Sacramento in which technical experts on autonomous vehicles detailed how the Tesla features require nearly constant monitoring by drivers and don’t have the capabilities of robotaxis, such as those operated by Waymo. Musk, the world’s wealthiest person, has said it’s a priority for Tesla to lead in autonomous driving, though it’s taking a relatively low-cost approach to do so, especially with regard to sensors. Tesla uses a camera-only system, avoiding more sophisticated laser lidar and radar units that help autonomous vehicles see in all lighting conditions and in 3D. Federal safety investigators recently expanded an ongoing probe of Tesla’s FSD software.
Losing 30 days of sales in California could potentially cut Tesla’s revenue by tens of millions of dollars in 2026, and would come at a time when its EV sales volume is already declining. It also comes as the company aims to create a robotaxi service to rival Waymo’s. It’s been giving rides to paying customers in Austin with a 29-vehicle fleet, though those rides have a human safety driver in the front. The company has begun testing fully autonomous versions of the robotaxi in Austin, though with no paying customers for now.
Investor excitement over Tesla’s self-driving technology helped pump up the stock this week, with the shares closing at an all-time high of $489.88 on Dec. 16.
