California Could Suspend Tesla Manufacturing Over False Advertising Claim

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The California DMV has sued Tesla for false advertising, claiming the company has knowingly and consistently misled consumers for years in its advertising about the capabilities of its “Autopilot” and “Full Self Driving” features. If the suit is successful, the state could suspend the company’s manufacturing operations at its factory in Fremont, California, for up to 30 days. Such a suspension would be a serious blow to the financial health and reputation of the company.

The lawsuit, which is being heard in an administrative court in Oakland, California, this week, was first filed in 2022. An amended complaint was filed in 2023 and the case has been wending its way through the court process since then.

According to Newsweek, California represents a critical market for Elon Musk and Tesla. California is the state with the largest population and the state where Tesla sells the most cars in the US. Customers in San Francisco and Silicon Valley are strongly interested in high-tech and electric vehicles. Tesla sells more cars there than anywhere else in the US.

The DMV lawsuit could have an impact on how other manufacturers market semi-autonomous features offered in their own products. The DMV’s lawsuit highlights broader scrutiny on how automakers market semi-autonomous features, and its outcome may influence industry standards nationally.

In the documents filed with the court, attorneys for the state of California rely on four phrases of product descriptions from Tesla’s website which the state believes are misleading to the point of being false advertising. Phrases like autopilot, full self driving capability, and the claim that Tesla vehicles are “designed to be able to conduct short and long distance trips with no action required by the person in the driver’s seat” are all offered as examples of misleading claims by Tesla.

California Attorney General Rob Bonta wrote in a statement filed with the court on July 17, “These labels and descriptions represent specifically that respondent [Tesla]’s vehicles will operate as autonomous vehicles, which they could not and cannot do.”

According to Newsweek, attorneys for the company refute the state’s claims and have said the company “has always made clear” that the cars it makes are not technically fully autonomous, because they require “active driver supervision” from a human.

One claim made by Tesla has raised particular concern from the state of California. It says, “From Home — All you will need to do is get in and tell your car where to go. If you don’t say anything, your car will look at your calendar and take you there as the assumed destination. Your Tesla will figure out the optimal route, navigating urban streets, complex intersections and freeways. To your Destination — When you arrive at your destination, simply step out at the entrance and your car will enter park seek mode, automatically search for a spot and park itself. A tap on your phone summons it back to you.”

Experts Testify In Tesla Trial In Miami

If nothing else, the claims Tesla makes about how proficient its cars are at driving themselves is keeping a lot of high-priced legal talent busy. In 2020, a German court banned the use of the word Autopilot by Tesla in that country. This spring, authorities in the UK prevented Tesla from offering its Full Self Driving system in the country.

Despite all the pushback, Elon Musk continues to insist on using the terms Autopilot and Full Self Driving and taking any officials to task who think the phrases are deceptive or misleading. He has the attitude common among tech bros that laws are just silly barriers to new technology that saves lives.

That is precisely the issue in a trial taking place in federal court in Miami this week that involves a fatal accident in which a Tesla operating in Autopilot mode failed to react to a stop sign at a T intersection and plowed straight ahead into the side of a Chevy Tahoe parked on the other side of the intersection. The force of the collision pushed the Tahoe into a couple standing nearby, killing one and severely injuring the other.

If a jury finds for the plaintiff, who is the legal representative of the deceased, it could damage Tesla’s reputation and hurt its sales and stock price, Sam Fiorani, an analyst at AutoForecast Solutions, told the New York Times. “All of the stock value in the company is based on the future, and the future is autonomous,” he said.

Attorneys for the plaintiff told the jury that although the Tesla owners manual says Autopilot should only be used on divided highways, it can still be activated on a two-lane road with no center barrier, which seems a bit of a contradiction. General Motors and Ford offer similar systems that can be used only on divided highways and could not be used on the road the Tesla in question was driving on.

“My professional opinion is that Tesla Autopilot is defective because it allows it to be operated in domains it wasn’t designed for,” Mary Cummings, a George Mason University professor who is an expert in autonomous driving systems and for a time worked at the National Highway Traffic Safety Administration (NHTSA), testified last week as a witness for the plaintiffs. Tesla’s means of monitoring driver behavior — touching the steering wheel lightly every so often — “cannot prevent misuse” and represents a “crucial safety gap” in Autopilot, Cummings told the jury.

Other witnesses for the plaintiff maintained that the Tesla was equipped with two other systems that were capable of slowing or stopping the car. One, called automatic emergency braking, is standard on most vehicles sold in the United States and is supposed to apply the brakes even if the accelerator is depressed. The car also had a third system that was supposed to stop the car if it determined that the vehicle was about to leave the roadway. The Chevy Tahoe was parked on a gravel area. According to the video retrieved by the police from the car after the accident, the Autopilot system had identified that area as outside of “driveable space,” and yet the car continued hurtling through the T intersection with no decrease in speed.

What makes this case especially problematic for Tesla is that the trial judge has ruled that the plaintiff may ask for punitive damages. Tesla is taking an enormous gamble letting this case go to trial. Soon it will be up to the jury to decide whether the safety systems built into this particular Tesla should have been able to compensate for errors in judgment made by the driver, who was searching for his cell phone when the collision took place. Much of Musk’s reputation as a leader in the tech field will be at risk when the jury retires to deliberate this week or next.