Observed Signal · Feb 23, 2026 · Lawsuit · Source: CNBC Technology · Impact: 1/5 · Sentiment: Neutral
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.
This is a legal/regulatory dispute primarily affecting automotive and autonomous-driving markets; it has limited direct impact on the AdTech industry aside from broader implications for regulatory scrutiny of marketing claims.
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Key Takeaways & Evidence Grounding
- Tesla sued the California Department of Motor Vehicles to reverse an OAH ruling that it engaged in false advertising regarding Autopilot and Full Self-Driving.
- California's Office of Administrative Hearings found Tesla engaged in false advertising and said the DMV could temporarily suspend Tesla's manufacturing or sales licenses; the DMV instead required Tesla to revise marketing language.
- Tesla changed its branding to "Full Self-Driving (Supervised)" and now offers the feature on a subscription basis.
- Tesla is testing automated vehicles in a Robotaxi pilot in Austin, Texas, and announced start of production for a two-seater Cybercab designed without a steering wheel or pedals in Texas.
- A separate California class action seeks refunds from customers who bought FSD expecting robotaxi-capable upgrades; Tesla was also held partly liable in a fatal Autopilot-related crash resulting in a $243 million verdict.
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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.
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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