In a significant ruling that puts Tesla's marketing strategies under scrutiny, the California Department of Motor Vehicles has threatened to slam brakes on Tesla's sales operations within the state. Tesla has been given a 90-day ultimatum to correct disputed claims in its self-driving and autopilot advertising, or face a 30-day sales suspension, according to the San Francisco Chronicle. The dispute hinging on depictions of Tesla’s "Autopilot" and "Full Self-Driving" features, raises concerns over the accuracy and clarity of the automaker's promotional language.
Steve Gordon, the director of the California DMV, conveyed in a recent press conference that although a complete manufacturing and sales suspension was ordered by Judge Juliet Cox, only the latter stands to be enforced should Tesla fail to comply. The decision by state leaders to "indefinitely" stay on the manufacturing injunction, however, leaves the company's factory operations unfazed for now. The San Francisco Chronicle detailed the DMV's expectation that Tesla correctly label their products to avoid misleading consumers into believing their vehicles are autonomous when, as Tesla maintains, they require "active driver supervision."
The controversy centers on four specific phrases used by Tesla that state officials and a presiding judge find to be problematic. These include "autopilot," "full self-driving capability," and assertions that Tesla cars are able to independently navigate public roads and park themselves. The DMV insists these descriptions falsely imply that Tesla’s vehicles operate autonomously. Consequently, as reported by the San Francisco Chronicle, Attorney General Rob Bonta explained in a brief that such marketing could potentially violate advertising norms. Tesla has ostensibly resolved similar issues in markets other than California.
Tesla's legal representatives counterargued throughout the proceedings, affirming that while their technology is advanced, they have never claimed full autonomy and have always highlighted the need for a human driver's oversight. Reacting to the state's directive, a spokesperson espoused Tesla's defiance, remarking to the CNBC, "This was a 'consumer protection' order about the use of the term 'autopilot' in a case where not one single customer, came forward to say there’s a problem." The statement further assured that sales activities in California will persist without disruption.
The controversy has done little to dampen investor enthusiasm for the electric vehicle manufacturer, with Tesla's stock price reaching a new high immediately following the announcement. This investor confidence seems bolstered by prospects of Tesla's future Robotaxis and driverless technologies despite the current legal friction with the state DMV over marketing practices. The reported stock surge was highlighted by CNBC following the glowing outlook from Wall Street.
Amidst this legal tussle, Tesla now advertises its driver assistance system as Full Self-Driving (Supervised), arguably to comply with the required clarity in marketing communications as outlined by the DMV and the California administrative judge.
