California Regulator Puts Tesla Sales Suspension Order on Hold

Tesla Sales Suspended: A California regulator has deferred an order for Tesla to suspend sales in its biggest U.S. market, giving the electric vehicle maker more time to address its accusation of misleading marketing and overstating self-driving capabilities.

The Department of Motor Vehicles (DMV) ordered the suspension of Tesla's manufacturing and sales licenses for 30 days, adopting a judge's proposals, but immediately put it on hold, DMV Director Steve Gordon told reporters on Tuesday.

The stay will come as a relief to an automaker, which, along with peers, is battling a plunge in EV demand following the expiry of tax credits that have been a major driver of sales.

At the same time, CEO Elon Musk has switched focus at Tesla to robotaxis equipped with self-driving technology as well as humanoid robots, and much of its valuation hangs on those bets.

The DMV in 2022 accused Tesla of misleading consumers in using the brand names Autopilot and Full Self-Driving (FSD) for its vehicles' advanced driver assistance features. The regulator told Judge Juliet Cox of the Office of Administrative Hearings that the names falsely implied the cars operate autonomously.

A lawyer for Tesla told the hearing that the automaker had "clearly and consistently" explained that cars with Autopilot and FSD software require supervision and are not autonomous.
Judge Cox proposed the suspension, which the DMV adopted but put on hold on Tuesday. Gordon said the agency wanted to give Tesla "one more chance to be able to remedy the situation," saying he hoped it will "find a way to get these misleading statements corrected."

The DMV stayed the suspension of Tesla's sales license for 90 days and its manufacturing license indefinitely.

To avoid the suspension, the DMV said Tesla can submit a statement confirming it has either stopped using the name Autopilot for its driver assistance software or confirming its cars can operate without active monitoring by a human.

The DMV said Tesla can appeal the suspension or seek a court review by February 14.

Tesla, in a statement, said, "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. Sales in California will continue uninterrupted."

A spokesperson declined to elaborate on how Tesla knew no customers had complained. They also declined to say whether Tesla would stop using the Autopilot name or if it would appeal.

Autopilot helps Tesla vehicles accelerate, brake and stay in lanes on highways. Full Self-Driving gives vehicles the ability to change lanes and obey traffic signals on city streets.

The DMV has narrowed its focus to the term Autopilot as Tesla made changes to FSD during proceedings, Gordon said, without elaborating.

Tesla has added the term "Supervised" for FSD in passenger vehicles. It uses an unsupervised version of the software when moving cars from assembly lines to delivery lots at some of its factories. It also uses FSD for a robotaxi service in Austin, Texas, with human safety monitors in front passenger seats and remote support.

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