Tesla Might Face Losing Its Permission to Sell Cars in California | Carscoops

      Tesla is currently facing scrutiny over its marketing claims in a five-day hearing that could jeopardize its ability to sell vehicles in California.

      The California Department of Motor Vehicles (DMV) is accusing Tesla of exaggerating the capabilities of its driver-assistance systems.

      The DMV is reportedly aiming to suspend or revoke Tesla’s dealer license in the state.

      The automotive company is experiencing increased regulatory pressure in California as it prepares to respond to allegations regarding its Autopilot and Full Self-Driving features. The upcoming hearing stems from previous claims by the California DMV, asserting that Tesla misled consumers about the actual functions of its driver-assistance systems.

      The outcome of this hearing could have major implications for Tesla's business operations in California, as regulators consider whether to suspend or revoke its dealer license, which is necessary for the company to sell cars in the state.

      This case originated in July 2022 when the California DMV accused Tesla of overstating the capabilities of its Autopilot and Full Self-Driving systems. The complaint indicated that Tesla's marketing materials suggested that its vehicles could “conduct short and long-distance trips with no action required from the driver.”

      **Implications for Tesla’s Operations in California**

      In June 2025, a California judge decided against dismissing the claims, requiring Tesla to appear before an administrative law judge in Oakland. The hearing is scheduled to commence on Monday. As reported by Bloomberg, the DMV is looking to potentially suspend or revoke Tesla's dealer license in California, which would threaten the company's capacity to sell vehicles in the state.

      Tesla's legal team contends that the marketing language in question falls under free speech protections and asserts that the statements regarding the company’s autonomous driving capabilities have been taken out of context, lacking the necessary disclaimers about the requirement for “active driver supervision” with Autopilot.

      **Robotaxi Aspirations Heighten the Stakes**

      Additionally, Tesla is also pursuing regulatory approval to broaden its robotaxi operations in San Francisco. If approved, a fleet of Tesla Model Y vehicles would operate independently, though still under human oversight and within designated geographical boundaries, positioning Tesla in direct competition with Waymo, which already offers similar services in the city.

      **Separate Case in Florida Raises Broader Safety Concerns**

      Meanwhile, Tesla is involved in a jury trial in Miami concerning a 2019 incident in which a Tesla Model S fatally struck a pedestrian. The jury's task is to determine whether Tesla's Autopilot system bears any responsibility along with the vehicle's distracted driver. Other fatal crashes involving Autopilot are currently under investigation, with more trials anticipated in the future.

      In the Miami case, the plaintiffs have called upon engineering professor and former Navy pilot Mary “Missy” Cummings as an expert witness. She has criticized the branding of Autopilot, arguing that it fosters unrealistic expectations based on its aviation counterpart.

      “It fosters an inappropriate level of confidence in the vehicle since autopilot is highly effective in aviation,” Cummings noted. “This leads to a misconception for consumers regarding its effectiveness in automobiles.”

      Tesla insists that discussions about autonomous driving without human intervention are “future-oriented” and do not accurately portray the present technology. Currently, Tesla's Autopilot is classified as a Level 2 Advanced Driver Assistance System (ADAS), necessitating ongoing driver supervision. Elon Musk has repeatedly forecasted that Tesla will achieve full autonomy (Level 5), but these ambitions have yet to be realized.