California regulators threaten 30-day suspension of Tesla sales license over self-driving claims

California regulators are threatening to suspend Tesla's license to sell its electric cars in the state early next year unless the company scales back marketing that regulators say misleads consumers about Autopilot and Full Self-Driving. Administrative Law Judge Juliet Cox concluded that Tesla had for years engaged in deceptive marketing by using the terms Autopilot and Full Self-Driving to promote autonomous technology available in many of its cars. The California Department of Motor Vehicles’ proposed penalty centers on a 30-day suspension of Tesla's California sales license, a step supporters say would pressure the company to be more precise about what its driver-assistance systems can and cannot do. Cox also recommended that regulators consider suspending Tesla's license to manufacture cars at its Fremont, California, plant, but officials indicated they would not impose that portion of the judge's recommendation at this time. Tesla will have a 90-day window to make changes that more clearly convey the limits of its self-driving technology to avoid the sales suspension.

Under the judge's recommendation, Tesla would face a temporary loss of its California sales license for up to 30 days if the company does not clearly convey the limits of its self-driving technology. The plan does not call for an immediate shutdown of the Fremont plant, and regulators said they would not pursue that step now. Tesla has 90 days to implement the messaging changes after the DMV finalizes its order. The proposed remedy also reflects ongoing regulatory expectations that automakers provide transparent disclosures about the need for human oversight when using driver-assistance features.

During five days of hearings in Oakland in July, Cox found that Tesla's use of Autopilot and Full Self-Driving to describe what is, in many cases, assistive technology amounted to deceptive marketing. The ruling was released late Tuesday, and Steve Gordon, the DMV director, said the agency has the authority to pursue the penalties but added that Tesla could pause the decision and resolve the issue quickly by taking straightforward steps that other autonomous-vehicle makers have used to ensure accurate descriptions of their systems. Tesla did not immediately respond to a request for comment on the ruling.

California's action aligns with a broader pattern of regulatory scrutiny over how self-driving technology is marketed to consumers. The company has faced lawsuits in several jurisdictions alleging it misled customers about Autopilot and Full Self-Driving capabilities. Earlier this year, a Miami jury held Tesla partly liable for a fatal crash that occurred while Autopilot was deployed and ordered the automaker to pay more than $240 million in damages; Tesla has since settled or prevailed in other cases.

Investors have watched Tesla's marketing push for autonomous driving amid broader challenges. The company has faced a downturn in demand and increased competition, even as it revamps its Model Y and introduces lower-cost variants of the Model Y and Model X to sustain sales. In Austin, Tesla began testing robotaxis earlier this year, with a human supervisor in the car to intervene if something goes awry; Musk disclosed recently that Tesla had begun tests of robotaxis without a safety monitor in the vehicle. On the markets, Tesla's shares flirted with an all-time high earlier in the week, hitting $495.28 during early trading before retreating below $470 as the day progressed. The stock remained higher than levels seen before Musk’s involvement in prior political and regulatory episodes.

The California DMV's action underscores ongoing regulatory risks tied to self-driving marketing and the broader push by authorities to ensure that consumer-facing claims about autonomous features reflect the current technological limits. Regulators say the issue is not merely about branding but about the potential safety implications of overstating what driver-assistance systems can do as the technology moves toward broader deployment.