An administrative law judge ruled that Tesla engaged in deceptive marketing that gave customers a false impression of the capabilities of its Autopilot and fully self-driving driver assistance software. This was a pivotal development in a years-long lawsuit initiated by the California Department of Transportation.
According to multiple media outlets, a judge agreed to the state DMV’s request to suspend Tesla’s sales for 30 days as punishment for Tesla’s actions, but the DMV put the order on hold and gave Tesla 60 days to correct or remove the deceptive language before enforcing the suspension. According to Bloomberg News, a judge recommended suspending Tesla’s manufacturing license for 30 days, but the DMV also put that order on hold.
“The DMV’s decision today confirms that the department will hold all automakers to the highest safety standards to protect California drivers, passengers, and pedestrians,” DMV Director Steve Gordon said in a statement. “Tesla can cancel this decision and take simple steps to permanently resolve this issue, steps that self-driving car companies and other automakers have been able to accomplish in California’s nationally leading supportive innovation market.”
Tesla said in a post on X that “sales in California will continue without interruption.”
“This was a ‘consumer protection’ order regarding the use of the term ‘Autopilot’ when no customer had come forward with a problem,” the company wrote.
After a 60-day grace period, Tesla can appeal the decision, and if Tesla complies, the suspension will be lifted. However, it was not immediately clear what action the DMV wanted Tesla to take, other than instructing it to “take action regarding its use of the term ‘Autopilot.'” The DMV did not immediately respond to requests for clarification or Tesla’s apparent plan to ignore the decision.
Tesla faces multiple investigations from the California Attorney General, Department of Justice, and Securities and Exchange Commission over similar allegations that its marketing of partially autonomous systems was misleading. The company has also faced (and has now settled) numerous private civil lawsuits over crashes related to Autopilot technology.
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The case, filed by the CA DMV, has been pending for years, involving the state’s Office of Administrative Hearings. The agency essentially accused Tesla of misleading customers into believing that its advanced driver assistance systems had advanced self-driving capabilities. The DMV argued that this led to overconfidence in the system and contributed to dozens of crashes and multiple fatalities. Tesla disputed these claims, arguing that its marketing is protected speech.
The suspension of sales in California, Tesla’s largest market in the United States, could have a significant impact on Tesla’s business, even if only temporarily. Production suspensions could also have a negative impact on Tesla’s business. Although the company built a larger factory in Austin, Texas (and moved its official headquarters to the same location), it still relies on its Fremont, California factory to manufacture hundreds of thousands of vehicles, including all Model 3 sedans destined for North America.
The judge’s ruling comes as Tesla continues to test its robotaxi service in Austin. The company removed safety monitors from light vehicles in the city over the weekend. It has been providing ride-hailing services to customers in the city for the past six months, with safety monitors installed in either the driver’s or passenger’s seat. CEO Elon Musk said the vehicles run a different version of Tesla’s driving software than the one installed by Tesla customers.
This article has been updated to include information from the DMV’s press release and Tesla’s response.
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