Tesla Inc. will be allowed to continue selling electric vehicles in California uninterrupted after the company revised what the state had called misleading marketing of driver-assistance technology.
The automaker has taken “corrective action” including ending the use of Autopilot branding in California, the state’s Department of Motor Vehicles said in a statement late Tuesday. Tesla also has modified its use of the term Full Self-Driving to clarify when supervision is required.
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California had been poised to suspend Tesla’s sales license for 30 days after a ruling in December from an administrative judge on allegations that Tesla was exaggerating the capabilities of the driver-assistance systems. The state gave the company a period to either appeal or come into compliance.
The reprieve is a win for Tesla, which is working to reverse a multiyear sales slump at a moment when the loss of US incentives is weighing on EV demand. California is the biggest market for car sales in the US and the leading state for electric vehicle adoption, making any disruption there costly.
Related: ZEV Registrations in California Fell for the First Time Since 2020
Tesla didn’t respond to a request for comment.
The company’s shares rose less than 1% before regular trading Wednesday in New York. The stock was down 8.7% this year through Tuesday’s close, worse than the S&P 500 Index, which was essentially unchanged.
Tesla has faced years of scrutiny from federal prosecutors, securities regulators and the National Highway Traffic Safety Administration, plus lawsuits by consumers and investors, over how its driver-assistance features are marketed, used and perform. Both Autopilot and Full Self-Driving require active human supervision and thus don’t make its vehicles autonomous, a notion further obscured by the company’s efforts to stand up a robotaxi business.
The EV maker discontinued its Autopilot product in January. The company also has increasingly been using the term Full Self Driving (Supervised) to advertise a system that is not fully autonomous and requires constant supervision.
Top photo: Tesla Inc. electric vehicles (EV) at SuperCharger stations in San Francisco, California, on Friday, Jan. 23, 2026. Tesla Inc. is scheduled to release earnings figures on January 28. Photographer: David Paul Morris/Bloomberg.
Copyright 2026 Bloomberg.
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