Tesla is suing the California Department of Motor Vehicles (DMV) to overturn a ruling. The ruling found that the automaker violated the law by falsely advertising its vehicles' self-driving capabilities. The lawsuit was filed two months after California's Office of Administrative Hearings ruled Tesla engaged in false advertising and said the DMV could suspend the company's license to produce or sell cars in California.
The DMV did not impose a direct penalty, but required Tesla to correct its marketing language. As of February 17, the agency said Tesla had completed appropriate rectifications and did not need to suspend its license.
But Tesla, which has bet its future heavily on driverless taxis, is demanding more concessions from the DMV. In a complaint filed on February 13, the company’s attorneys alleged that the DMV “improperly and without basis” defined Tesla’s previous use of “Autopilot” and “Full Self-Driving” as false claims.
Tesla has now renamed its partially automated driving assistance system to "Full Self-Driving (Assisted Mode)" and is only offering it on a subscription basis. In the past, Tesla divided some of its autonomous driving functions into basic Autopilot, enhanced Autopilot and FSD levels, and opened beta or early access to new features to some users, but these features were not fully complete. The company had previously sold the systems for a one-time upfront fee.
The DMV had no immediate comment. Tesla did not immediately respond to a request for comment.
Tesla CEO Elon Musk has long promised investors and customers that the company's vehicles can gradually become vehicles that can be used for driverless taxis through OTA software upgrades. Despite increasingly advanced systems, this goal has not yet been achieved.
After last year's decline in electric vehicle sales, Tesla's future success is highly dependent on its ability to launch a truly driverless system that allows vehicles to drive safely without humans at the wheel and brakes at all times.
Currently, Tesla is conducting a driverless taxi pilot test on a small number of self-driving vehicles in Austin, Texas. Last week, the company announced it would begin production in Texas of its upcoming Cybercab, a two-seater designed with no steering wheel or pedals.
For years, Tesla's marketing has suggested that its system can be used safely without the driver's concentration. For example, in 2018, Musk drove a Model 3 with Autopilot on on the CBS "60 Minutes" program, with reporter Leslie Starr sitting in the passenger seat. Musk took his hands off the wheel and told Stahl he was "not doing anything" and that the vehicle was driving autonomously.
However, the Tesla owner's manual clearly states that drivers must pay full attention to the road when using the FSD (Assist Mode) feature.
In documents filed with the California Office of Administrative Hearings, attorneys for the California DMV argued that Tesla’s marketing of “Autopilot” and “Full Self-Driving” falsely suggested the vehicles could operate autonomously.
Tesla lawyers argue that the DMV has never proven that California consumers were misled into thinking that the vehicles could be driven safely without human control.
Tesla lawyers said that when users purchase or use any Tesla equipped with Autopilot or FSD functions, they will see clear and repeated prompts stating that these systems do not allow the vehicle to achieve full autonomous driving.
In a separate class-action lawsuit before a California court, consumers who purchased FSDs with the expectation that their vehicles would later be upgraded to self-driving taxis are seeking refunds.
Tesla was also found partially responsible in a fatal crash involving Autopilot. During the trial, the car owner claimed that he dropped his cell phone while driving and bent down to pick it up, believing that the vehicle's enhanced Autopilot system would automatically brake when it encountered an obstacle. The case ultimately ordered Tesla to pay $243 million in compensation to the families of the victims and an injured survivor.