Tesla Challenges California DMV False Advertising Ruling

Faizan Farooque

Wed, February 25, 2026 at 5:23 AM GMT+9 1 min read

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This article first appeared on GuruFocus.

Tesla, Inc. (TSLA, Financials) is suing California’s Department of Motor Vehicles in an effort to reverse a ruling that found the company falsely advertised its vehicles’ self-driving capabilities.

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The legal action follows a decision by the state’s Office of Administrative Hearings that Tesla violated the law by promoting its Autopilot and Full Self Drivingfeatures in a way that suggested autonomous operation. The DMV had the authority to suspend Tesla’s license to sell vehicles in California but instead required the company to revise its marketing language.

Tesla now refers to its system as Full Self Driving (Supervised) and sells it on a subscription basis. In its complaint, Tesla argued the agency wrongfully and baselessly labeled the company a false advertiser and said regulators failed to prove consumers were misled.

Chief Executive Elon Musk has long said Tesla vehicles would eventually operate as robotaxis through software updates. The company is testing automated vehicles in Austin, Texas, and recently began production of its Cybercab model without a steering wheel or pedals.

Tesla’s ability to deliver fully autonomous vehicles is central to its long-term growth strategy, especially after declining electric vehicle sales last year. The lawsuit adds to ongoing legal and regulatory scrutiny over its driver-assistance technology.

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