Tesla faces 30-day car sale ban for misleading use of 'Autopilot' branding, CA DMV warns
SAN FRANCISCO (KGO) -- An unprecedented order from the California Department of Motor Vehicles to Tesla: Change your advertising or lose the right to sell.
The warning follows years of criticism and a court ruling last month that found the way the company advertises its "autopilot" feature breaks state law.
"I've been an automotive journalist for about 20 years and I've never heard of such a thing. My hunch tells me the DMV wouldn't do something unless they had it backed up," said columnist James Raia.
MORE: Federal probe of Tesla self-driving system after reports of crashes, running red lights
California regulators say the terms "autopilot" and "full self-driving capability" mislead consumers into thinking Tesla vehicles are fully self-driving when that's not true.
"100 percent of the time you, as the driver, must be in the driver's seat and you have to be paying attention and be able to take over at any moment," said Scott Moura.
Moura is the head of the Institute of Transportation Studies at UC Berkeley.
He says he sees how the autopilot feature could be confusing for people who are unfamiliar with Teslas.
"It's literally just a tap when you put in your destination in these vehicles. They might not really understand what it does," said Moura.
At a charging station in San Francisco, we spoke with other Tesla drivers.
Some, like Alexander Nielsen, say that while they enjoy using the features, they believe the company could do a better job explaining exactly what they are.
MORE: Jury orders Tesla to pay more than $240 million in Autopilot crash case
"It's not like you can read a book like in a Waymo, for example. The Waymo, in my opinion, is an autonomous vehicle, but this is not," said Nielsen.
The 90-day clock for Tesla to change its advertising began on Tuesday.
And for many, that potential change will help keep everyone on the roads safer.
"I think this is probably a step in the right direction in terms of what does the industry require when a company says that it's a self-driving car. Or how do we determine what the technology actually means?" said Raia.
In a post on Musk's X service, Tesla brushed off the decision as regulatory overkill. "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 company said.
The automaker has already been plagued by a global downturn in demand that began during a backlash to Musk's high-profile role overseeing cuts in the U.S. government budget overseeing the Department of Government that President Donald Trump created in his administration. Increased competition and an older lineup of vehicles also weighed on Tesla sales, although the company did revamp its Model Y, the world's bestselling vehicle, and unveil less-expensive versions of the Model Y and Model X.
Although Musk left Washington after a falling out with Trump, the fallout has continued to weigh on Tesla's auto sales, which had decreased by 9% from 2024 through the first nine months of this year.
MORE: Tesla settles with Apple engineer's family who said Autopilot caused fatal Bay Area crash
Despite the slump and the threatened sales suspension in California, Tesla's stock price touched an all-time high $495.28 during Wednesday's early trading before backtracking later to fall below $470. Despite that reversal, Tesla's shares are still worth slightly more than they were before Musk's ill-fated stint in the Trump administration - a "somewhat successful" assignment he recently said he wouldn't take on again.
The performance of Tesla's stock against the backdrop of eroding auto sales reflects the increasing emphasis that investors are placing on Musk's efforts to develop artificial intelligence technology to implant into humanoid robots and a fleet of self-driving Teslas that will operate as robotaxis across the U.S.
Musk has been promising Tesla's self-driving technology would fulfill his robotaxi vision for years without delivering on the promise, but the company finally began testing the concept in Austin earlier this year, albeit with a human supervisor in the car to take over if something went awry. Just a few days ago, Musk disclosed Tesla had started tests of its robotaxis without a safety monitor in the vehicle.
California regulators are far from the first critic to accuse Tesla of exaggerating the capabilities of its self-driving technology in a potentially dangerous manner. The company has steadfastly insisted that information contained in its vehicle's owner's manual on its website have made it clear that its self-driving technology still requires human supervision, even while releasing a 2020 video depicting one of its cars purportedly driving on its own. The video, cited as evidence against Tesla in the decision recommending a suspension of the company's California sales license, remained on its website for nearly four years.
Tesla has been targeted in a variety of lawsuits alleging its mischaracterizations about self-driving technology have lulled humans into a false of security that have resulted in lethal accidents. The company has settled or prevailed in several cases, but earlier this year a Miami jury held Tesla partly responsible for a lethal crash in Florida that occurred while Autopilot was deployed and ordered the automaker to pay more than $240 million in damages.
VIDEO: How Mercedes beat Tesla to become 1st to offer level 3 autonomous personal car
ABC7 News has covered this exstensively in our new original series "A Driverless Tomorrow" where we explore Tesla's attempts to create a "self-driving" vehicle and how their technology relies heavily on driver's to perfect its data.
To watch all the episodes of "A Driverless Tomorrow" click here.
The Associated Press contributed to this article.
