Tesla has officially cleared a major regulatory hurdle in California, ensuring that its ability to sell and manufacture cars in the state remains uninterrupted. The resolution follows a 2025 decision by the California Department of Motor Vehicles (DMV), which had found that Tesla’s use of the terms “Autopilot” and “Full Self-Driving” was potentially misleading under state law.
To resolve the issue, Tesla has taken corrective action by moving away from the “Autopilot” branding in its California-specific marketing and clarifying that its systems require active driver supervision at all times. This quick adjustment by Tesla means the company will avoid a 30-day suspension of its dealer and manufacturer licenses that was previously on the table.
The core of the dispute focused on whether the product names accurately reflected the capabilities of the vehicles. The DMV argued that descriptions used as far back as 2021 suggested the cars were closer to being fully autonomous than they actually were. Since those initial filings, Tesla has been proactive in updating its language, most notably rebranding its flagship software to “Full Self-Driving (Supervised)” to make the human-in-the-loop requirement crystal clear.
DMV Director Steve Gordon noted that the department is pleased with the steps Tesla took to stay in compliance with the state’s consumer protection laws. It’s a classic case of the tech moving faster than the rules, and Tesla seems to have found the right middle ground to keep the regulators happy while continuing to push the envelope on its software stack.
This settlement is particularly important for Tesla’s momentum in 2026. California is not only a massive market for the Model 3 and Model Y but also serves as the testing ground for the upcoming Cybercab. By settling this naming dispute now, Tesla clears the air just as it begins scaling its broader AI and robotics projects.
While the legal process was lengthy, the outcome is a win for both the state and the company, providing clearer expectations for owners and ensuring that the most tech-forward cars on the road can continue to be sold in the heart of Silicon Valley. For now, the “supervised” era is officially here to stay, and Tesla is moving full speed ahead with a slightly updated dictionary.
Source: California DMV
