Why California Regulators Are Forcing Tesla to Rethink How It Sells Autopilot to Drivers

Tesla sold drivers a future where cars could largely drive themselves. But the California Department of Motor Vehicles, a regulatory agency in the US, now accuses the company of overselling both its “Autopilot” and “Full Self-Driving” features.

The agency says that sales of Tesla in California would be suspended for 30 days if the Elon Musk-led company doesn't change its marketing practices. “The DMV’s decision today confirms that the department will hold every vehicle manufacturer to the highest safety standards to keep California’s drivers, passengers and pedestrians protected,” the DMV Director, Steve Gordon, said in a statement.

He later told reporters that “We’re really asking Tesla to do their job, as they’ve done in other markets, to properly brand these vehicles.”

The decision follows a 2022 complaint from the DMV, which argued that Tesla’s language gave drivers the impression they were buying highly automated driving, not driver-assistance software that still requires constant human control.

That distinction matters. According to the DMV, inflated expectations around Tesla’s systems contributed to crashes and fatalities, as some drivers placed too much trust in features that were never designed to replace them. Tesla disagreed, arguing that its marketing is protected speech and that customers understand the limitations. The judge wasn’t convinced.

If the order goes into effect, it could disrupt sales, production, and investor confidence in Tesla almost overnight.

There is, however, a narrow escape hatch. Tesla has 90 days to appeal or revise any claims regulators consider misleading. If it complies, the suspension won’t take effect. Tesla has already signalled it plans to fight, calling the ruling a consumer-protection decision focused on branding rather than real harm, and insisting sales in California will continue.

“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’s a problem. Sales in California will continue uninterrupted,” Tesla said in a statement

The case also highlights how differently Tesla approaches autonomy compared to rivals like Waymo. Most autonomous-driving competitors use a sensor-fusion approach that combines cameras, radar, and lidar to create redundancy and improve reliability in different conditions.

Tesla, by contrast, has explicitly rejected lidar and has moved toward a vision-only approach (“Tesla Vision”), relying primarily on cameras and neural networks to interpret the environment. Tesla has also removed radar from many of its vehicles in recent years, reinforcing its commitment to a camera-centric system.

Tesla has faced scrutiny from multiple agencies over how it describes its automated features, along with civil lawsuits tied to crashes involving those systems. This ruling fits into a growing pattern: regulators are no longer just asking how the technology works, but how it’s framed to everyday drivers.

California remains one of Tesla’s most valuable markets. A suspension, even temporary, could cost the company billions in lost revenue and disrupt production at its Fremont factory, which still builds hundreds of thousands of vehicles each year.

This ruling comes at a time when the company has been expanding Robotaxi testing in Texas, even removing safety monitors from a small fleet. It’s pushing forward on autonomy while being told to slow down on the story it tells about it.

Tesla’s ambition to lead autonomous driving hasn’t changed. What has changed is the tolerance for how that ambition is sold. California’s ruling sends a clear message to the industry: progress is welcome, but promises have limits. In the race toward autonomy, regulators aren’t trying to slow innovation; they’re trying to make sure the story matches the reality.

Tesla’s Robotaxis have begun testing in Texas

Unlike competitors like Waymo or Amazon, Tesla’s approach is unconventional.

TechloyOgbonda Chivumnovu