Tesla is challenging California regulators in court, filing a lawsuit against the state’s Department of Motor Vehicles (DMV) over accusations of false advertising related to its “Autopilot” and “Full Self-Driving” features. The legal battle centers on whether Tesla misled consumers about the capabilities of these advanced driver-assistance systems, which require active driver supervision. This dispute over Tesla autopilot comes as the company continues to push the boundaries of autonomous vehicle technology.
The California DMV found Tesla in violation of state law in December 2025, concluding that the use of the terms “Autopilot” and “Full Self-Driving Capability” was misleading, according to a DMV news release. An administrative law judge had previously determined that Tesla’s marketing suggested its vehicles could drive themselves, a claim regulators dispute. The DMV initially threatened to suspend Tesla’s manufacturing and dealer licenses for 30 days if the company didn’t address the issue within 90 days.
Tesla’s Response and the Lawsuit
In response to the DMV’s findings, Tesla took corrective action, ceasing the use of the term “Autopilot” in its California marketing materials and clarifying that its “Full Self-Driving” mode requires driver supervision. This action successfully avoided the threatened suspension of its licenses, as reported by the DMV. However, Tesla is now actively fighting the original ruling, arguing it was “factually wrong” and “legally flawed” in a case filed this month, according to court documents.
The company is seeking to overturn the DMV’s order and regain the ability to use the terms “Autopilot” and “Full Self-Driving Capability.” In a Feb. 13 court filing, Tesla asserted that its marketing materials clearly communicated the limitations of the features, stating, “It was impossible to buy a Tesla equipped with either Autopilot or Full Self-Driving Capability, or to use any of their associated features, without seeing clear and repeated statements that they do not make the vehicle autonomous.” The filing is available on Plainsite.
Broader Context: Autonomous Driving and Competition
This legal challenge unfolds as Tesla CEO Elon Musk places a significant bet on the future of autonomous technology and artificial intelligence. However, the company has faced recent challenges, including declining federal support and a reputation crisis impacting electric vehicle sales. Tesla’s rollout of robotaxis in Austin, Texas, last summer drew regulatory scrutiny after reports of glitches and dangerous driving decisions, as noted by the Los Angeles Times.
Tesla is not alone in the race to develop self-driving technology. The company faces competition from Waymo, a subsidiary of Alphabet, which operates fully driverless taxis in 10 cities, and Zoox, an Amazon-backed robotaxi initiative. The development and deployment of these technologies are subject to ongoing regulatory review and public debate regarding safety and liability.
Financial Impact and Market Reaction
As of Wednesday, February 17, 2026, Tesla’s shares closed at $417.33, representing a nearly 2% increase for the day. Over the past year, the stock has risen by 37%, indicating continued investor confidence despite the regulatory challenges. The outcome of this lawsuit could have significant implications for Tesla’s marketing strategy and its position in the rapidly evolving autonomous vehicle market.
The DMV’s decision to pursue action against Tesla highlights the increasing scrutiny faced by companies developing and deploying advanced driver-assistance systems. Regulators are focused on ensuring that marketing claims accurately reflect the capabilities of these technologies and that consumers are not misled about the level of driver involvement required.
Tesla did not respond to a request for comment regarding the lawsuit.
The next step in this legal battle will be a hearing in Los Angeles County Superior Court, where Tesla will present its arguments against the DMV’s ruling. A date for the hearing has not yet been set. We will continue to follow this developing story and provide updates as they develop into available.
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