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A California administrative law judge just ruled that Tesla engage in deceptive marketing for Autopilot and Full Self Driving. Now the ruling came down yesterday and the judge agreed with the state DMV's request to suspend Tesla sales and manufacturing licenses for 30 days as a penalty. Now the DMV has stayed the order and is giving Tesla 60 days to fix its marketing or face the suspension. Tesla's response was immediate. The company posted on X that sales in California will
continue uninterrupted. So what does that even mean? What happens when the state's largest automaker refuses to comply with a court ruling that says its product names are misleading? The case has been winding through California's Office of Administrative Hearings for years. The DMV accused Tesla of making customers believe that Autopilot and Full Self Driving were capable of high levels of autonomy, which contributed to overconfidence, crashes and even deaths.
Now, we're going to cover what the judge actually found, but Tesla has to do to avoid suspension. And while the company says it will not comply and what this means for AI and autonomous vehicle markets in the future, and we'll go right into that right after this short break. You know, the California DMV filed accusations against Tesla's manufacturing and dealer licenses back in November of 2023. And the company pointed to written marketing materials primarily on Tesla's website.
They used the terms autopilot and full self driving capability. One phrase that drew particular attention was this. The system is designed to be able to conduct short and long distance trips with no action required by the person in the driver's seat. That statement was on Tesla's website. The problem is that vehicles equipped with those features could not operate as autonomous vehicles when that statement was published, and they still cannot fully now.
Here's the key point to all of this. So the judge found that the name Autopilot follows what the ruling called a long but unlawful tradition of intentionally using ambiguity to mislead consumers while maintaining deniability. A reasonable person could believe that a car on Autopilot does not require their constant attention. That is incorrect. The driver is still fully responsible for the vehicle at all times. Now, on full self driving, the
court was much harsher. The judge found that this feature name is, in the court's words, actually unambiguously false and counterfactual. Tesla tried to argue that no reasonable person could believe Full Self driving actually means full Self Driving, and then the court rejected that argument. Tesla has since added the word supervised to the name of its Full Self Driving software and now reads Full Self Driving and then supervised and Tesla's marketing materials.
The DOV acknowledged that change, but said it does not go far enough now. Tesla's response was very defiant. The company issued a statement through a public relations firm saying 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 was a problem and the judge addresses it directly.
Though the DMV is authority to regulate vehicle advertising does not depend on evidence that any particular ad actually deceived or harm any person, the agency is permitted to act affirmatively to prevent deceptive advertising actually before any harm occurs. Now, the judge also anticipated
Tesla's likely non compliance. She wrote that without the incentive of suspension, Tesla offers no reason for the DMV to expect they will alter the Autopilot name or stop misrepresenting his vehicle's driver assistance functions to the public. Now, Suspension of Tesla's licenses is a reasonable remedy now. The DMV's original decision included a 30 day suspension of both Tesla's sales license and its manufacturing licenses. Now the agency softened that a little bit.
It permanently stayed the manufacturing suspension to avoid disrupting operations at Tesla's Fremont factory, which builds hundreds of thousands of cars per year, including all North American Model 3 sedans. Now the sales license suspension is what remains on the table. California's Tesla's largest market in the USA, 30 day shutdown of sales would have a significant impact on the company's quarterly numbers. Tesla knows this. The DMV knows this.
The leverage is part of why the agency gave Tesla 60 days to comply rather than enforcing the suspension immediately. And Tesla has two options. It can change its marketing to remove the term Autopilot or make it software actually capable of autonomous driving. The first option is a branding concession that Tesla has resisted for almost a decade. Second option does not exist yet.
Tesla's vehicles are classified as Level 2 driver assist systems, which means a human must remain engaged and ready to take over at all times. And this ruling lands at the same moment that Tesla is advancing its robotaxi test in Austin. The company removed safety monitors from some of their cars over the weekend from its small fleet in the city. It had been offering rides to customers with a safety monitor either in the driver's seat or
the passenger seat. Now those vehicles are operating without a human backup. Tesla says the Austin robo taxis are running a different version of the driving software than what customers have in their cars. That distinction matters legally, but it also shows how Tesla is pushing forward on autonomy claims while simultaneously fighting a ruling that says its current claims are misleading. Now, Tesla has faced multiple investigations over similar allegations.
The California Attorney General, Department of Justice, and the Securities and Exchange Commission have all looked into whether Tesla's marketing around partial autonomy systems was misleading. The company has also settled several personal civil lawsuits over crashes involving Autopilot. This ruling is the first major state level decision that could force Tesla to change how it
describes its products. Now, DMV Director Steve Gordon said in a statement that the decision confirms the department will hold every vehicle manufacturer to the highest safety standards. He added that Tesla can take simple steps to pause the decision and permanently resolve the issue. These steps, according to Gordon, are ones that autonomous vehicle companies and other automakers have already achieved in California's marketplace. Now, Tesla has 60 days to comply.
If it doesn't, the DMV will suspend its dealer license for 30 days. Tesla says sales will continue uninterrupted, and the state says otherwise. Now we're going to find out in two months which statement holds true. Hey, thank you so much for listening today. I really do appreciate your
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