Tesla Sues California DMV Over False Advertising Ruling on FSD

The automaker seeks to reverse the state's finding that it misled customers about self-driving capabilities.

Published on Feb. 23, 2026

Got story updates? Submit your updates here. ›

Tesla is suing the California Department of Motor Vehicles (DMV) to overturn a ruling that found the company engaged in false advertising by misleadingly promoting its cars' self-driving capabilities. The DMV previously determined that Tesla's use of terms like "Autopilot" and "Full Self-Driving" falsely suggested its vehicles were capable of autonomous operation, and said the company could face license suspensions. Tesla is now challenging that decision in court, arguing the DMV "wrongfully and baselessly" labeled it a "false advertiser."

Why it matters

This legal battle highlights the ongoing tensions between Tesla's ambitious self-driving claims and regulatory scrutiny over the actual capabilities of its driver assistance systems. The outcome could impact Tesla's ability to market and sell its vehicles in California, a crucial market, as well as set precedents around autonomous vehicle advertising claims.

The details

In its lawsuit, Tesla alleges the DMV unfairly determined it engaged in false advertising, despite the company's position that it was "impossible to buy a Tesla equipped with either Autopilot or Full Self-Driving Capability, or to use any of their associated features, without seeing clear and repeated statements that they do not make the vehicle autonomous." Tesla now uses the brand name "Full Self-Driving (Supervised)" and sells the system only on a subscription basis, after previously offering it as a one-time purchase option packaged with its Autopilot driver assistance features.

  • In February 2026, California's Office of Administrative Hearings ruled that Tesla violated the law by falsely promoting its cars' self-driving capabilities.
  • On February 17, 2026, the California DMV said Tesla had appropriately cleaned up its marketing language and would not face a license suspension.
  • On February 13, 2026, Tesla filed a lawsuit to challenge the DMV's false advertising ruling against the company.

The players

Tesla

An American electric vehicle and clean energy company that is banking much of its future on developing autonomous driving capabilities.

California Department of Motor Vehicles (DMV)

The state agency that regulates the automotive industry in California, including overseeing vehicle manufacturers' advertising and marketing claims.

Got photos? Submit your photos here. ›

What they’re saying

“It was impossible to buy a Tesla equipped with either Autopilot or Full Self-Driving Capability, or to use any of their associated features, without seeing clear and repeated statements that they do not make the vehicle autonomous.”

— Tesla's attorneys (CNBC)

What’s next

The judge presiding over Tesla's lawsuit against the California DMV will determine whether to uphold or overturn the agency's false advertising ruling against the company.

The takeaway

This legal battle highlights the ongoing challenges Tesla faces in reconciling its ambitious self-driving claims with regulatory scrutiny over the actual capabilities of its driver assistance systems. The outcome could significantly impact Tesla's ability to market and sell its vehicles in California, a crucial market for the company.