A California Administrative Law Judge has ruled that Tesla Inc.’s (NASDAQ:TSLA) marketing around its Autopilot and full self-driving systems has been deceptive, and has since suggested punitive measures against the company and its operations in the state.
30-Day Suspension of Sales And Manufacturing
On Tuesday, Steve Gordon, the Director of the California Department of Motor Vehicles, said during a press briefing that a California court has recommended the suspension of Tesla’s license to sell and manufacture vehicles in the state for 30 days, according to a report by Business Insider.
On November 21, Judge Juliet Cox made a proposed decision on whether the automaker had misled consumers on its autonomous driving features, based on a lawsuit filed by the California DMV earlier this year.
The state regulator found Tesla’s branding of its driver assistance technologies as “Full Self-Driving” and “Autopilot” to be misleading, with the company’s website describing its FSD driver assistance system as being “designed to be able to conduct short and long-distance trips with no action required by the person in the driver’s seat.”
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Yet, during the hearings, Attorney Matthew Benedetto, a member of Tesla’s legal team said, “Cars with Full Self-Driving capabilities are currently not capable of driving themselves.”
The proposed decision was sent to the DMV for consideration, but was withheld from the public, and will not be released until December 22.
The DMV, however, has decided not to pursue the suspension of its license to manufacture and has imposed a 90-day stay on the suspension of its license to sell, allowing the company sufficient time to amend its marketing practices and rebrand the term “Autopilot” across its marketing materials.
“We want to be fair to them and give them a chance to see if they can find a resolution now that there is a ruling from the administrative law judge,” Gordon said.
Tesla Shares Touch New Record High
Despite this regulatory headwind in its biggest domestic market, Tesla shares soared 3.07% to a new record high on Tuesday, closing at $489.88 per share, and are down 0.89% overnight.
This comes as optimism continues to mount regarding the company’s autonomous driving features, with CEO Elon Musk confirming this week that Tesla had begun testing its robotaxis in Austin without a human “safety monitor” in the passenger seat.
Tesla shares score high on Momentum and Quality in Benzinga’s Edge Stock Rankings, with a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock, its peers and competitors.
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