Tesla avoids 30-day California sales suspension after dropping misleading ‘Autopilot’ marketing

Tesla has avoided a 30-day suspension of its dealer and manufacturer licenses in California after complying with a DMV order to stop using the term “Autopilot” in its vehicle marketing. The settlement closes a case that dragged on for nearly three years, and confirms what critics have argued all along: Tesla’s marketing of its driver-assist features was misleading.

The case against Tesla’s ‘Autopilot’ and ‘Full Self-Driving’ marketing

The California DMV first opened an investigation into Tesla’s marketing of “Autopilot” and “Full Self-Driving” back in 2021. The agency accused Tesla of misleading consumers by marketing advanced driver-assistance features under names that implied the vehicles could drive themselves.

Specifically, beginning in May 2021, Tesla marketed its ADAS features with the phrase: “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.” The problem is that vehicles equipped with those features could not, and still cannot, operate as autonomous vehicles.

The DMV filed formal accusations against Tesla’s manufacturer and dealer licenses in November 2023. Tesla’s defense was remarkable in its brazenness: the company argued that the DMV had known about its use of “Autopilot” and “Full Self-Driving” branding since 2014 and 2016, respectively, essentially claiming there should be a statute of limitations on misleading the public.

After a five-day hearing in 2025, an administrative law judge sided with the DMV. In December 2025, the judge ruled that Tesla’s use of “Autopilot” to describe its ADAS features is misleading and violates state law. The ruling found that Tesla’s naming convention “follows a long but unlawful tradition of intentionally using ambiguity to mislead consumers.”

The judge initially ordered a 30-day suspension of both Tesla’s manufacturer and dealer licenses. The DMV’s final decision reduced the penalties, permanently staying the manufacturer’s license suspension and giving Tesla 60 days to stop using the term “Autopilot.”

Tesla’s corrective action and the convenient FSD pivot

According to the California DMV, Tesla took “corrective action” and stopped using the misleading term “Autopilot.” The company also modified its use of “Full Self-Driving” by adding clarification that driver supervision is required.

In January, Tesla went further: it killed Autopilot entirely in the U.S. and Canada, discontinuing the feature as a standalone product. The move did more than satisfy the DMV, it also conveniently funneled owners toward FSD Supervised, which requires payment.

The timing was hard to ignore. The DMV’s compliance deadline of February 14 coincided exactly with Tesla’s decision to move FSD to a subscription-only model at $99 per month, eliminating the $8,000 one-time purchase option. As we noted in January, the overlap between the California ruling and the FSD subscription pivot raised serious questions about Tesla’s real motivation.

Elon Musk has said the $99 subscription price is expected to increase as the system becomes “more capable,” but he said that before and the opposite happened.

Electrek’s Take

This outcome is about as good as Tesla could have hoped for, given that a judge formally ruled the company had been misleading consumers for years. Avoiding a 30-day sales ban in its biggest US market is a win, but let’s not pretend this is vindication.

The fact remains that Tesla marketed driver-assistance features under names that implied full autonomy, and it took regulatory action and a court ruling to force the company to stop. Tesla’s argument that the DMV knew about the misleading branding for years and therefore shouldn’t be able to act on it was never a serious legal defense, it was an admission wrapped in a complaint.

The most telling part of this story is the timing. Tesla killed Autopilot, moved FSD to subscription-only, and hit the DMV’s compliance deadline all on the same date. That’s not a coincidence, it’s a company restructuring its entire ADAS business model around a regulatory order while trying to make it look like a strategic choice. The FSD subscription push has its own problems, but at least a monthly subscription doesn’t require Tesla to promise that the system will one day become fully autonomous.

The bigger question is whether any of this changes consumer perception. Tesla spent years building a brand around the promise of self-driving, and now it’s quietly walking that back while still claiming 1.1 million “FSD subscribers”, a number that includes people who bought the package outright years ago and Tesla owes them what they sold them. The marketing may have changed, but the gap between what Tesla promises and what it delivers on autonomous driving remains as wide as ever.