California threatens to ban Tesla sales for 30 days

Tesla has 90 days to fix claims in its advertising of self-driving and autopilot features that the state says are misleading, officials at the California Department of Motor Vehicles announced Tuesday.

If the company does not remedy the situation, it stands to lose its license to sell vehicles in the state for 30 days.

The decision follows a long-running case before Administrative Judge Juliet Cox in Oakland. Last month she ruled in favor of a more dramatic suspension of Tesla’s business, barring it both from manufacturing and selling vehicles for the 30-day period. DMV leaders “indefinitely” stayed Cox’s decision on manufacturing, said Steve Gordon, director of the department.

However, the DMV left open the possibility of blocking Tesla from selling vehicles, in what could be a huge blow to an electric car brand that already faced backlash over the politics of its chief executive, Elon Musk. DMV officials temporarily stayed the ruling on selling vehicles, providing a 90-day window to give the electric car company “one more chance,” Gordon said.

Technically, he explained, the stay lasts for 60 days, and Tesla has another 30 days to respond “or take some other action.”

“We’re really asking Tesla to do their job, as they’ve done in other markets, to properly brand these vehicles,” he told reporters in a video news conference Tuesday afternoon, right after the state sent its formal decision to Tesla.

At the heart of the case are four phrases or product descriptions from Tesla’s website that state officials characterize as ambiguous or that amount to false advertising. These include: “autopilot”; “full self-driving capability”; a promise that the system “is designed to be able to conduct short and long-distance trips with no action required by the person in the driver’s seat”; and claims that a Tesla can effectively drive people to their destination, with the vehicle navigating streets, freeways and intersections and then automatically parking itself.

“These labels and descriptions represent specifically that respondent (Tesla)’s vehicles will operate as autonomous vehicles, which they could not and cannot do,” Attorney General Rob Bonta wrote in a July 17 brief.

“We want these terms to be clarified so they are not misleading,” Gordon said. “So they do not lead people to believe they are an automated driving system (a.k.a. an autonomous vehicle) when in fact, as Tesla claims, they are an advanced driving system.” He noted that Tesla has already resolved this issue in other markets outside California.

During court proceedings Tesla’s attorneys maintained that while the company’s driver assistance technology qualifies as “state of the art,” the company “has always made clear” that its vehicles are not fully autonomous, and that they require “active driver supervision” from a human.

The company struck a defiant tone in a statement reacting to the state order.

“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,” a spokesperson said. “Sales in California will continue uninterrupted.”