Aerial view of Tesla’s Fremont factory in San Rafael, California, January 29, 2026.
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tesla is suing the California Department of Transportation, seeking to overturn a judgment that found the automaker violated the law by falsely advertising the self-driving features of its vehicles.
The lawsuit comes two months after the state Administrative Hearings Board found Tesla engaged in false advertising and announced the DMV could temporarily suspend the company’s license to manufacture or sell cars in the state.
Instead, the DMV asked Tesla to clean up its marketing terminology. By February 17, the agency announced that Tesla had acted appropriately and that there was no need to suspend its license.
But Tesla, which is betting much of its future on robotaxis, wants to see more development at the DMV. Lawyers for the automaker alleged in a Feb. 13 complaint that Tesla “unjustly and baselessly” labeled them a “false advertiser” because of Tesla’s previous use of the terms “Autopilot” and “full self-driving.”
Tesla currently uses the brand name “Full Self-Driving (Supervised)” to describe its partially autonomous driving assistance system, which it sells only on a subscription basis. In the past, Tesla has packaged partial self-driving features into Autopilot Standard, Enhanced Autopilot, and Full Self-Driving tiers, giving some customers early access to “beta” or new features that have not yet been fully debugged. The company sold the system for a one-time upfront fee.
The DMV had no immediate comment. Tesla did not respond to a request for comment.
Tesla CEO Elon Musk has long promised investors and customers that the company’s cars will be upgraded over time through over-the-air software updates, turning them into robotaxi-enabled vehicles. The company’s systems are becoming more sophisticated, but it’s not there yet.
After sales of electric cars declined last year, Tesla’s future success will largely depend on its ability to provide unmanned systems that allow cars to be used safely without a human at the wheel, and that can steer and brake at any time.
Tesla is currently testing several self-driving cars at its robotaxi pilot in Austin, Texas. The company announced last week that it would begin production of its next two-seater CyberCab in Texas, a design without a steering wheel or pedals.
For years, Tesla has presented its systems as if they were safe to use without an attentive driver. For example, in 2018, Musk appeared on CBS’ “60 Minutes” driving a Model 3 on Autopilot with correspondent Leslie Stahl in the passenger seat. While the car was driving itself, Musk took his hands off the steering wheel and told Stahl he was “not doing anything.”
However, Tesla’s owner’s manual clearly states that drivers should not use the FSD (supervised) feature without paying attention to the road.
In a filing with California’s OAH, lawyers for the state’s DMV wrote that Tesla’s “Autopilot” and “full self-driving” marketing falsely suggests that the car can drive itself.
Tesla’s lawyers argued that the DMV never proved that consumers in the state were confused about whether the company’s cars could be safely operated without a human driver.
When Tesla used these brand names, the company’s lawyers argued that “it was impossible to purchase a Tesla with Autopilot or Full Self-Driving capabilities or to use related features without a clear and repeated statement that it did not have self-driving capabilities.”
In another class action lawsuit pending in a California court, customers who purchased FSDs in hopes of upgrading their cars to robotaxi-capable vehicles over time are seeking refunds.
Tesla was also held partially responsible for a fatal accident involving Autopilot. During the trial, the Tesla owner said he dropped his cell phone while driving and scrambled to pick it up, thinking the car’s enhanced autopilot system would brake if there was an obstacle. The lawsuit resulted in a judgment that ordered Tesla to pay $243 million to the families of the deceased and injured survivors of the accident.
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