The California Department of Motor Vehicles (DMV) said it adopted a judge’s proposal to suspend Tesla’s manufacturing and sales licences for 30 days but has placed the order on hold. DMV Director Steve Gordon said on Tuesday that the agency decided to defer enforcement to allow Tesla an opportunity to remedy what regulators describe as misleading marketing statements.
The decision offers some relief to Tesla at a time when the automaker, like much of the electric vehicle industry, is grappling with slowing demand following the expiry of U.S. tax incentives that had previously boosted sales. It also comes as chief executive Elon Musk has increasingly positioned Tesla as an artificial intelligence and robotics company, with major bets on robotaxis powered by self-driving software and the development of humanoid robots—initiatives that underpin a large share of the company’s market valuation.
The dispute dates back to 2022, when the DMV accused Tesla of misleading consumers through the use of the terms “Autopilot” and “Full Self-Driving” (FSD) to describe its advanced driver assistance systems. Regulators argued that the branding falsely suggested Tesla vehicles were capable of operating autonomously, a claim the agency said was not supported by the technology’s actual capabilities.
Tesla has consistently rejected that interpretation. During administrative hearings, the company’s lawyer told Judge Juliet Cox of the Office of Administrative Hearings that Tesla had “clearly and consistently” informed customers that both Autopilot and FSD require active human supervision and do not make vehicles fully autonomous.
Judge Cox ultimately proposed a suspension of Tesla’s licences, a recommendation the DMV formally adopted. However, Gordon said the agency opted to stay the order, describing the move as a final opportunity for Tesla to correct the issues raised by regulators.
“We want to give Tesla one more chance to be able to remedy the situation,” Gordon said, adding that the agency hoped the company would “find a way to get these misleading statements corrected.”
Under the revised decision, the DMV stayed the suspension of Tesla’s sales licence for 90 days, while the suspension of its manufacturing licence was deferred indefinitely. To avoid enforcement, the DMV said Tesla must submit a statement confirming that it has either stopped using the term “Autopilot” for its driver assistance system or that its vehicles are capable of operating without active human monitoring.
The regulator also said Tesla may appeal the suspension or seek judicial review by February 14.
In a statement, Tesla characterised the action as a consumer protection case centred on branding rather than product performance. “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,” the company said, adding that sales in California would continue without interruption.
A Tesla spokesperson declined to explain how the company determined that no customers had complained, and also did not say whether Tesla plans to stop using the Autopilot name or pursue an appeal.
Autopilot enables Tesla vehicles to accelerate, brake and remain within lanes on highways, while Full Self-Driving adds features such as lane changes and compliance with traffic signals on city streets. According to Gordon, the DMV has narrowed its regulatory focus to the Autopilot branding after Tesla made changes to how it presents and deploys FSD during the proceedings.
Tesla has recently added the term “Supervised” to describe FSD in passenger vehicles. The company also uses an unsupervised version of the software to move cars within factory sites and operates a robotaxi service in Austin, Texas, which includes human safety monitors and remote support systems.