Tesla is taking legal action against California’s Department of Motor Vehicles (DMV) in a bid to scrub a “false advertiser” label from its corporate record. The lawsuit, filed on February 13, seeks to reverse a state ruling that found the electric vehicle maker misled consumers by exaggerating the capabilities of its driver-assistance software.
The legal battle follows a determination by the state’s Office of Administrative Hearings (OAH) in December 2025, which concluded that Tesla’s use of the terms “Autopilot” and “Full Self-Driving” (FSD) violated California law. According to CNBC, while the DMV originally threatened to suspend Tesla’s manufacturing and sales licenses, it ultimately allowed the company to continue operating after Tesla agreed to update its marketing language.
A Battle Over Brand Identity
Despite reaching a compliance agreement on February 17, Tesla’s legal team alleges that the DMV acted “wrongfully and baselessly” by branding the company a false advertiser. In the formal complaint, Tesla’s attorneys argue that it was impossible for customers to purchase these features without being exposed to “clear and repeated statements” that the systems do not make the vehicle fully autonomous.
Tesla has since pivoted its branding to “Full Self-Driving (Supervised)” to explicitly signal that a human must remain attentive at all times. This shift comes as the company moves toward a subscription-only model for its advanced features, moving away from the high-cost, one-time purchase fees of the past.
Robotaxis and Future Stakes
The timing of the lawsuit is critical for Tesla’s long-term strategy. The company is currently testing a robotaxi pilot program in Austin, Texas, and recently announced that the first production unit of its Cybercab has rolled off the assembly line at Gigafactory Texas.
Tesla’s future valuation is heavily tied to the promise of unsupervised autonomy. However, the company faces significant headwinds in court. Just last week, a federal judge upheld a $243 million jury verdict against Tesla in a separate Florida case. In that trial, a jury found Tesla 33% liable for a fatal 2019 crash, concluding that the automaker failed to provide sufficient warnings about the limitations of Autopilot.
The Road Ahead
As Tesla attempts to clear its name in California, it continues to face a class-action lawsuit from owners who claim they were sold a “robotaxi” dream that has yet to materialize. The California DMV has not yet commented on the new suit, but state lawyers have previously maintained that Tesla’s marketing suggested a level of autonomy that was “technologically and legally inaccurate.”
