Tesla faces temporary sales suspension in California
DMV Takes Aim At Tesla's Autopilot Ads
Tesla has long called its most sophisticated driver-assist features "Autopilot" and "Full Self-Driving," which is inaccurate as neither system allows for autonomous driving. Now the automaker might finally face serious consequences for this practice.
First reported by Electrek, Tesla could temporarily lose its license sell cars in California amid a lawsuit brought by the state's DMV, which alleges that the automaker is misrepresenting the capability of its driver aids, constituting false advertising. The DMV is looking to suspend Tesla's ability to sell cars in California for 30 days. That would be a major blow to the automaker.
Tesla Accused Of Exaggerating Tech's Capabilities
According to Electrek, the California DMV has been investigating Tesla for misleading customers about the capabilities of its driver-assist tech since 2021. The agency is reportedly concerned not only about the names of the features, but about statements by the automaker, such as one claiming that such tech "is designed to be able to conduct shot and long-distance trips with no action required by the person in the driver's seat."
The California DMV also flagged a public statement from Tesla in which the automaker claims that "all you need to do is get in and tell your car where to go." In response, Tesla has reportedly argued that in-car warnings for drivers to stay attentive at all times are sufficient to prevent customers from misconstruing the capabilities of its driver-assist systems.
That doesn't seem to have been a convincing argument as, during a five-day court hearing on the matter, the California DMV said that it is seeking a suspension of Tesla's manufacturer and dealer license "for not less than 30 days," as well as financial restitution, with an amount to be determined at a future hearing.
More Trouble For Tesla
This isn't the first time Tesla has faced scrutiny from government agencies over the way it's portrayed its driver-assist tech to customers. In 2021, Jennifer Homendy, chairwoman of the National Transportation Safety Board (NTSB), called Tesla's Full Self-Driving nomenclature "misleading and irresponsible." The federal government has also investigated Tesla driver aids multiple times in recent years, including one earlier this year of the "Smart Summon" remote parking feature involving 2.6 million vehicles.
But where previous investigations have usually resulted in recalls or orders to address potential safety faults, this lawsuit could impact Tesla's already-declining sales. California is not only the biggest market for EVs in the United States, but the biggest market for new cars overall. Even a short suspension of sales is not what the automaker needs.
Tesla saw a big year-over-year sales drop in the second quarter, just as top sales executives left the company. Meanwhile, its new head of sales is a former IT executive with no sales experience. And the federal government's suspension of emissions penalties means Tesla could lose business from the sale of compliance credits—a revenue stream that's often been more important to the company's bottom line than car sales.
Tesla faces temporary sales suspension in California first appeared on Autoblog on Jul 21, 2025
This story was originally reported by Autoblog on Jul 21, 2025, where it first appeared.
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