Tesla Escalates Legal Battle with California DMV Over Self-Driving Advertising Claims
In a significant legal move, Tesla has initiated a lawsuit against the California Department of Motor Vehicles (DMV). The electric vehicle manufacturer, led by CEO Elon Musk, is contesting a regulatory ruling that accused the company of false advertising related to its self-driving technology. This lawsuit represents the latest development in ongoing tensions between Tesla and state regulators concerning the marketing of its driver assistance systems to consumers.
Background of the Regulatory Dispute
According to reports, the lawsuit stems from a decision issued two months ago by California's Office of Administrative Hearings. The ruling determined that Tesla violated state law by misleadingly promoting the automated driving capabilities of its vehicles. As a result, the DMV was authorized to temporarily suspend Tesla's licenses for manufacturing or selling vehicles in California. However, regulators ultimately chose not to impose this penalty.
Instead, the DMV instructed Tesla to revise its marketing language. Earlier this month, the agency confirmed that the company had implemented the required changes, thereby avoiding any license suspension. Despite this, Tesla is pursuing further legal action, arguing that the regulator's findings continue to harm its reputation and business operations.
Tesla's Legal Arguments and Marketing Adjustments
In a complaint dated February 13, Tesla's attorneys alleged that the DMV "wrongfully and baselessly" labeled the company a "false advertiser" due to its previous use of terms like "Autopilot" and "Full Self-Driving." The automaker maintains that its branding accurately reflects the reality that its driver-assistance features still necessitate human supervision.
To address regulatory concerns, Tesla has rebranded the system as "Full Self-Driving (Supervised)" and transitioned to a subscription model, moving away from the one-time purchase structure previously employed. Earlier iterations of the technology were marketed across various tiers, including Autopilot, Enhanced Autopilot, and Full Self-Driving, with some customers granted "beta" or early access to features still under development.
Regulatory and Consumer Perspectives
In filings submitted to California's Office of Administrative Hearings, attorneys representing the state's DMV contended that Tesla's marketing of "Autopilot" and "Full Self-Driving" created the impression that the vehicles were capable of autonomous operation. Tesla's legal team countered this by asserting that regulators failed to demonstrate that consumers were misled about the vehicles' ability to operate safely without human supervision.
The company's attorneys argued that when those brand names were used, "It was impossible to buy a Tesla equipped with either Autopilot or Full Self-Driving Capability, or to use any of their associated features, without seeing clear and repeated statements that they do not make the vehicle autonomous."
Broader Implications for Tesla's Future Strategy
The outcome of this case holds significant implications for Tesla, as the company increasingly positions automated driving technology and future robotaxi services as central to its long-term strategy. CEO Elon Musk has consistently informed investors and customers that Tesla's vehicles would eventually receive over-the-air software updates enabling them to function as robotaxi-ready cars. Although this transition has not yet materialized, Tesla's driver assistance systems have continued to evolve.
Following a decline in electric vehicle sales last year, Tesla's future growth is increasingly dependent on its ability to develop driverless systems that can operate vehicles without constant human intervention. The company is also advancing its Robotaxi project and testing self-driving cars in Austin, Texas. Concurrently, Tesla announced the commencement of Cybercab production at its Texas facility, a two-seater vehicle designed without a steering wheel or pedals.
Historical Context and Safety Concerns
Tesla has previously showcased its driving capabilities, suggesting the potential for minimal to no driver input. In 2018, Elon Musk appeared on CBS's 60 Minutes program with Lesley Stahl, demonstrating a Model 3 car with Autopilot engaged. During the segment, Musk removed his hands from the steering wheel, indicating that the car continued to move without his direct control.
However, Tesla's owner manuals explicitly state that drivers must remain attentive and should not use Full Self-Driving (Supervised) features without monitoring the road. This highlights the ongoing tension between marketing claims and safety requirements.
Related Legal and Consumer Issues
In a separate class-action lawsuit progressing through California courts, customers who purchased Full Self-Driving packages with expectations of future upgrades enabling robotaxi functionality are seeking refunds. Additionally, Tesla has faced legal challenges related to safety incidents.
In a notable case, Tesla was found partly liable in a fatal crash involving Autopilot. Testimony during the trial revealed that the driver had dropped his phone and attempted to retrieve it, believing the vehicle's Enhanced Autopilot system would brake if an obstacle appeared. The case resulted in a $243 million verdict against Tesla, awarded to the family of the deceased victim and an injured survivor of the crash.
This lawsuit against the California DMV underscores the complex regulatory landscape and high stakes for Tesla as it navigates the future of autonomous driving technology.
