Tesla filed a lawsuit on February 13, 2026, against the California Department of Motor Vehicles, challenging a December 2025 ruling that accused the company of misleading consumers through marketing of its Autopilot and Full Self-Driving features. Despite complying with required changes to avoid a sales license suspension, Tesla argues the decision was factually erroneous, legally flawed, and lacked evidence of consumer harm. The dispute underscores intense scrutiny of Tesla's driver-assistance systems amid its major California operations.
Tesla Inc. filed a lawsuit on February 13, 2026, in California Superior Court against the California Department of Motor Vehicles (DMV), seeking to reverse a December 2025 administrative ruling from the Office of Administrative Hearings. The ruling found Tesla guilty of false advertising since May 2021 for promoting Autopilot and Full Self-Driving (FSD) Capability as able to handle trips without driver input, despite the systems being Level 2 advanced driver-assistance tools requiring constant human supervision, per the National Highway Traffic Safety Administration (NHTSA).
The case stems from a DMV investigation launched in 2021 into Tesla's driver-assistance systems. Formal accusations against Tesla's manufacturer and dealer licenses were filed in November 2023, culminating in a 2025 multi-day hearing. The administrative law judge sided with the DMV, describing Autopilot as following 'a long but unlawful tradition' of ambiguity and FSD as 'actually, unambiguously false and counterfactual.' The ruling, effective January 15, 2026, proposed a 30-day suspension of Tesla's vehicle sales licenses in California unless marketing changes were made within 60-90 days.
Tesla responded by discontinuing Basic Autopilot in the U.S. in January 2026, rebranding it as Traffic Aware Cruise Control, removing 'Autopilot' from new vehicle equipment lists in the U.S. and Canada, consistently labeling FSD as 'Full Self-Driving (Supervised)'—a change introduced over two years prior—and shifting to a $99-per-month subscription model, ending the $8,000 one-time purchase. On February 17, 2026, the DMV confirmed compliance and imposed a permanent stay on the suspension. DMV Director Steve Gordon stated, 'The department is pleased that Tesla took the required action to remain in compliance with the State of California’s consumer protections.' A DMV spokesperson added: 'An Administrative Law Judge found that Tesla broke state law by misleading consumers with the term ‘autopilot.’ Tesla agreed to stop this practice, and now they’re challenging it anyway. DMV is committed to protecting the traveling public and will defend the findings in court.'
Despite compliance, Tesla contends the ruling 'wrongfully and baselessly' branded it a false advertiser. The company argues it was impossible to purchase or use the features without clear disclaimers on non-autonomy, notes the DMV relied almost entirely on one law professor's testimony without consumer witnesses, cites its polling showing only about one-third of buyers confused, claims violations of due process and the statute of limitations (Autopilot branding since 2014, FSD since 2016), and seeks to erase the finding from its record.
The lawsuit highlights Tesla's pivotal role in California, home to a large workforce and where the Model Y has been the top-selling vehicle for three years. It occurs amid broader concerns: NHTSA data as of January 15, 2026, shows over 2,800 crashes involving Tesla's systems (vs. 108 for General Motors), with Supervised FSD logging 8.2 billion miles. A federal judge upheld a $243 million verdict holding Tesla partially liable in an August 2025 fatal Autopilot crash. The NHTSA opened a probe in October 2025 into 2.88 million Tesla vehicles over 58 FSD incidents, including crashes, injuries, and failures like running red lights. Tesla faces competition from Waymo and Zoox in autonomous driving. The case is ongoing with no court date set.
