Observed Signal · Feb 24, 2026 · Lawsuit · Source: TechCrunch · Impact: 2/5 · Sentiment: Neutral
Tesla Fights DMV Over Deceptive Marketing Ruling
Tesla has filed a lawsuit against the California Department of Motor Vehicles seeking to overturn a DMV ruling that found the company used deceptive marketing by overstating its vehicles' automated driving capabilities. The dispute resurfaced after the DMV said it would not suspend Tesla’s sales and manufacturing licenses for 30 days because Tesla complied with the ruling and removed the term “Autopilot” from its California marketing. An administrative law judge had agreed with the DMV’s request to suspend licenses, but the regulator instead granted Tesla 60 days to comply. In January, Tesla discontinued Autopilot in the U.S. and Canada; the lawsuit may indicate the company is attempting to challenge or reverse parts of the regulator’s actions.
A legal challenge between Tesla and the California DMV concerns marketing of automated driving features and compliance with state regulation; notable for automotive and consumer-safety implications but has limited direct impact on the AdTech industry.
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Key Takeaways & Evidence Grounding
- Tesla filed a lawsuit against the California Department of Motor Vehicles to overturn an agency ruling.
- The California DMV ruled Tesla used deceptive marketing that overstated its vehicles' automated driving capabilities, violating state law.
- The DMV decided not to suspend Tesla’s sales and manufacturing licenses for 30 days because Tesla complied and stopped using the term “Autopilot” in its California marketing.
- An administrative law judge had agreed with the DMV’s request to suspend Tesla’s licenses for 30 days, but the DMV instead gave Tesla 60 days to comply.
- In January, Tesla discontinued Autopilot in the U.S. and Canada.
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Tesla Fights DMV Ruling on FSD Advertising Claims
Tesla sued the California Department of Motor Vehicles to overturn a ruling by the state's Office of Administrative Hearings that found the automaker engaged in false advertising by overstating its vehicles' self-driving capabilities. The OAH had said the DMV could temporarily suspend Tesla's manufacturing or sales licenses, but the agency instead required Tesla to revise its marketing. Tesla updated branding to "Full Self-Driving (Supervised)" and shifted to a subscription model; in its Feb. 13 complaint the company called the false-advertiser label "wrongful and baseless." The story notes Tesla's continued emphasis on robotaxi ambitions, ongoing Robotaxi pilot tests in Austin, Texas, production start of a Cybercab two-seater, related class-action litigation seeking refunds from FSD purchasers, and a separate trial verdict awarding $243 million tied to an Autopilot-involved fatal crash.
Tesla Escapes 30-Day Suspension by Dropping 'Autopilot' Term
The California Department of Motor Vehicles will not suspend Tesla’s sales and manufacturing licenses for 30 days after Tesla removed the term “Autopilot” from its vehicle marketing in California. The decision resolves a nearly three-year-old case stemming from a November 2023 DMV accusation that Tesla’s use of “Autopilot” and “Full Self-Driving” amounted to deceptive marketing. An administrative law judge had recommended a 30-day suspension in December, and the DMV gave Tesla 60 days to comply. Tesla had previously relabeled Full Self-Driving as supervised and, in January, discontinued Autopilot in the U.S. and Canada. FSD Supervised changed from an $8,000 one-time purchase to a $99/month subscription after February 14; Elon Musk said the subscription is likely to rise as capabilities improve.
Tesla's $243M Autopilot Verdict Stands After Court Ruling
A judge denied Tesla’s request to overturn a $243 million jury verdict that found the automaker partially responsible for a 2019 fatal crash in Florida involving its Autopilot driver assistance system. The original jury verdict (issued in August) allocated two-thirds of the fault to the driver and one-third to Tesla, and assessed punitive damages only against Tesla. In her decision, Hon. Judge Beth Bloom said Tesla’s grounds for relief repeated arguments previously considered and rejected and did not present new controlling law. Tesla had argued the driver bore the blame for the crash.
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