Tesla Motors is suing the California Department of Motor Vehicles (DMV) to overturn a ruling that determined the automaker violated the law by falsely advertising its vehicles' autonomous driving capabilities.
The lawsuit was filed two months after the California Office of Administrative Hearings ruled that Tesla had engaged in deceptive marketing practices and stated that the DMV could suspend the company's license to manufacture or sell vehicles in the state.
Instead of imposing direct penalties, the DMV required Tesla to revise its marketing language. As of February 17, the agency indicated that Tesla had made appropriate corrections, making a license suspension unnecessary.
However, Tesla, which is heavily betting on the future of self-driving taxis, is seeking further concessions from the DMV. In a petition filed on February 13, the company's attorneys accused the DMV of "improperly and without basis" classifying Tesla's previous use of the terms "Autopilot" and "Full Self-Driving" as false advertising.
Tesla has since renamed its partially automated driving assistance system to "Full Self-Driving (Supervised)" and now offers it only on a subscription basis. Previously, Tesla categorized its driver-assistance features into tiers such as basic Autopilot, Enhanced Autopilot, and Full Self-Driving, and granted some users access to beta or early-stage features that were not fully refined. The company had previously sold these systems for a one-time upfront fee.
The DMV has not yet provided an immediate comment. Tesla also did not immediately respond to requests for comment.
Tesla CEO Elon Musk has long promised investors and customers that the company's vehicles would gradually evolve into self-driving taxis through over-the-air software updates. Despite advancements in the system, this goal has not yet been realized.
Following a decline in electric vehicle sales last year, Tesla's future success is highly dependent on its ability to develop a truly autonomous driving system that allows vehicles to operate safely without constant human control of the steering wheel and brakes.
Currently, Tesla is conducting a pilot test of a small fleet of autonomous vehicles as self-driving taxis in Austin, Texas. Last week, the company announced the start of production in Texas for its upcoming Cybercab—a two-seater vehicle designed without a steering wheel or pedals.
For years, Tesla's marketing has implied that its systems can be used safely without the driver's full attention. For example, in 2018, Musk drove a Model 3 with Autopilot engaged during a CBS "60 Minutes" interview, with journalist Leslie Stahl in the passenger seat. Musk removed his hands from the wheel and told Stahl he was "doing nothing," claiming the car was driving itself.
However, Tesla's user manual explicitly states that drivers must remain attentive to the road at all times when using the Full Self-Driving (Supervised) feature.
In documents submitted to the California Office of Administrative Hearings, attorneys for the DMV argued that Tesla's marketing of "Autopilot" and "Full Self-Driving" falsely suggested that the vehicles could operate autonomously.
Tesla's lawyers countered that the DMV never demonstrated that California consumers were misled into believing the vehicles could drive safely without human intervention.
They contended that when customers purchase or use any Tesla equipped with Autopilot or Full Self-Driving, they are presented with clear and repeated disclaimers stating that these systems do not make the vehicle fully autonomous.
In a separate class-action lawsuit being heard in a California court, consumers who purchased Full Self-Driving with the expectation that their vehicles would eventually be upgraded to self-driving taxis are seeking refunds.
Tesla has also been found partially liable in a fatal crash involving Autopilot. During the trial, the vehicle's owner testified that he dropped his phone while driving, bent down to retrieve it, and believed the Enhanced Autopilot system would automatically brake if an obstacle was detected. The court ultimately ordered Tesla to pay $243 million in compensation to the victims' families and a surviving injured party.
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