California DMV Lawsuit Ruling
Tesla Statement: "Sales Will Continue Without Disruption"
Stock Closes Down 4.62%
A court has ruled that Tesla's "autonomous driving" advertisements, led by CEO Elon Musk, constitute "exaggerated advertising" as they could mislead consumers.
On December 17 (local time), according to the California Department of Motor Vehicles (DMV), a state administrative law judge concluded a hearing in a lawsuit filed by the DMV against Tesla and determined that Tesla's use of terms such as "Full Self-Driving (FSD) capability" and "autopilot" to describe its advanced driver-assistance system (ADAS) was false advertising inconsistent with the facts.
The administrative law judge found that such advertisements misled consumers and violated state law, and proposed an order to suspend Tesla's manufacturing and dealer (sales) licenses for 30 days.
However, the California DMV stated that while it accepts the court's decision, it would mitigate the penalty by immediately staying the suspension of Tesla's manufacturing license and granting Tesla a 60-day period to correct its use of the term "autopilot."
In a statement, Tesla said, "This is a 'consumer protection' order regarding the use of the term 'autopilot,' and not a single customer has raised an issue," adding, "Sales in California will continue without disruption."
Previously, in November 2023, the California DMV filed a complaint with the court requesting suspension of Tesla's manufacturing and dealer licenses, pointing out that Tesla's marketing materials advertised its driver-assistance features, Autopilot and FSD, with the phrase "designed to drive without any operation," which the DMV deemed misleading.
Subsequently, Tesla replaced the term "Full Self-Driving (FSD) capability" with "Full Self-Driving (supervised)," specifying that driver attention and supervision are required when using the FSD system.
According to U.S. media outlets such as Bloomberg and CNBC, "Tesla is facing a potential sales suspension in California due to deceptive marketing of Autopilot."
According to Bloomberg, from January to September of this year, the number of new Tesla vehicle registrations in California reached approximately 135,000, accounting for about 11% of Tesla's global sales during the same period. Tesla's electric vehicle production plant in the San Francisco Bay Area of California has an annual production capacity of over 650,000 units, making it the second largest after the Shanghai plant in China.
In addition, U.S. media reported that a class-action lawsuit by consumers regarding exaggerated advertising of Tesla's autonomous driving features is also underway in the Northern District Court of California.
On the New York Stock Exchange that day, Tesla's share price fell by more than 2% during intraday trading. Tesla's share price had closed at a record high of $489.88 the previous day, but reversed course and declined in a single day. Coupled with concerns over an artificial intelligence (AI) bubble triggered by Oracle, the stock closed at $467.26, down 4.62% from the previous session.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
