Tesla Sues California DMV over Autopilot

Weeks after it dodged a statewide sales ban in California, Tesla has taken its fight directly to the state’s Department of Motor Vehicles.

Late last year, an administrative law judge concluded that Tesla’s use of the terms “Autopilot” and “Full Self-Driving” misled consumers and violated state law. The California DMV then gave Tesla 60 days to correct its marketing language or face a 30-day suspension of its manufacturing and dealer licenses — a step that would have temporarily halted all vehicle sales in Tesla’s single largest US market.

Tesla complied by removing Autopilot from new vehicle sales, dropping the “Autopilot” branding, and shifting its FSD marketing to “Full Self-Driving (Supervised)” and “Tesla Self Driving,” both intended to emphasize the need for active driver attention and better manage consumer expectations.

With the immediate risk of a sales ban behind it, Tesla has now filed a lawsuit seeking to wipe out the DMV’s ruling.

The Lawsuit: "Wrongful and Baseless"

In a complaint filed on February 13, 2026, Tesla escalated the dispute by suing the California DMV to overturn the false advertising designation.

The suit asserts that the agency “wrongfully and baselessly” labeled Tesla a false advertiser. Tesla argues that the DMV failed to prove that California buyers were misled or confused about their vehicles’ capabilities at the time of purchase.

In essence, Tesla contends that, absent evidence of direct consumer deception, the sweeping regulatory action and false advertising label amount to administrative overreach by the DMV.

Why Fight a Ruling You Already Complied With?

Complying and then suing may look contradictory, but the broader financial and legal context explains the move.

Robotaxi Valuation

Tesla’s multi-trillion-dollar future valuation depends heavily on ambitions in robotaxis, artificial intelligence, and robotics. The company frequently highlights its growing FSD subscriber base, total miles driven, and safety statistics to investors and customers.

A formal, on-the-record ruling from California that the core branding of its self-driving software is "unambiguously false and counterfactual” would directly undercut those pitches to Wall Street and everyday buyers.

Legal Liabilities

The ruling also carries implications for civil litigation. Tesla faces numerous suits tied to Autopilot and FSD collisions, and a federal judge recently denied the company’s attempt to overturn a $243 million jury verdict stemming from a fatal 2019 Autopilot crash.

If the DMV’s decision remains in place, future plaintiffs could more easily claim that Tesla’s marketing led drivers to believe the cars were safer or more autonomous than they were.

By seeking to reverse the decision, Tesla is trying to close a potential vulnerability in its legal defenses around FSD and Autopilot.