California regulators are threatening to suspend Tesla’s licence to sell its electric cars in the state early next year unless the car maker tones down its marketing tactics for its self-driving features after a judge concluded that the Elon Musk-led company has been misleading consumers about the technology’s capabilities.
The potential 30-day blackout of Tesla’s sales in California in the United States is the primary punishment being recommended to the state’s Department of Motor Vehicles in a decision released late on Tuesday.
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The ruling by Administrative Law Judge Juliet Cox determined that Tesla had for years engaged in deceptive marketing practices by using the terms “Autopilot” and “Full Self-Driving” to promote the autonomous technology available in many of its cars.
After presiding over five days of hearings held in Oakland, California, in July, Cox also recommended suspending Tesla’s licence to manufacture cars at its plant in Fremont, California. But California regulators will not impose that part of the judge’s proposed penalty.
Tesla will have a 90-day window to make changes that more clearly convey the limits of its self-driving technology to avoid having its California sales licence suspended.
After California regulators filed its action against Tesla in 2023, the Austin, Texas-based company already made one significant change by putting in wording that made it clear its Full Self-Driving package still required supervision by a human driver while it is deployed.
“Tesla can take simple steps to pause this decision and permanently resolve this issue – steps autonomous vehicle companies and other automakers have been able to achieve”, said Steve Gordon, the director of the California Department of Motor Vehicles.
In a post on Musk’s X service, Tesla brushed off the decision as regulatory overkill.
“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”, the company said.
The car maker has already been plagued by a global downturn in demand that began with a backlash to Musk’s high-profile role overseeing cuts in the US government budget via the Department of Government Efficiency (DOGE) that President Donald Trump created.
Politics apart, increased competition and an older lineup of vehicles also weighed on Tesla sales, although the company did revamp its Model Y, the world’s bestselling vehicle, and unveil less-expensive versions of the Model Y and Model X.
Although Musk left Washington after a falling out with Trump, Tesla’s sales have continued to slide and have decreased by 9 percent from 2024 through the first nine months of this year.
Bumper stock
Despite the slump and the threatened sales suspension in California, Tesla’s stock price touched an all-time high of $495.28 during Wednesday’s early trading before backtracking later to fall below $470. Despite that reversal, Tesla’s shares are still worth slightly more than they were before Musk’s ill-fated stint in the Trump administration – a “somewhat successful” assignment he recently said he wouldn’t take on again.
The performance of Tesla’s stock against the backdrop of eroding auto sales reflects the increasing emphasis that investors are placing on Musk’s efforts to develop artificial intelligence technology to implant into humanoid robots and a fleet of self-driving Teslas that will operate as robotaxis across the US.
Tesla’s self-driving technology has been promising Musk’s robotaxi vision for years, but it has since failed to fulfill it. Tesla finally started testing the idea in Austin earlier this year, with a human driver driving the car to take over if something goes wrong. Tesla had begun testing its robotaxis without a safety monitor in the vehicle, according to Musk in the past few days.
Tesla’s critics are not the first to point fingers at California regulators for overstating the capabilities of its self-driving technology in a potentially dangerous way.
Even as the company released a 2020 video that purports to show one of its cars driving on its own, the company has steadfastly insisted that the information contained in the owner’s manual of its vehicle on its website makes it clear that its self-driving technology still needs human supervision.
The video, which Tesla cited as evidence in the decision to recommend the company’s suspension of its California sales license, remained on the company’s website for almost four years.
Tesla has been the target of a number of lawsuits, alleging that its misinterpretation of self-driving technology has lulled people into believing they have no security and caused fatal accidents.
Source: Aljazeera
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