California Judge Threatens to Shut Down Tesla Sales and Production in the State

An administrative law judge in California recommended that Tesla lose its right to sell and manufacture cars in the state for 30 days to punish the company for its use of the term “autopilot” to describe its basic driver assistance software. The decision was released late Tuesday. However, California’s DMV put that penalty on hold for at least 90 days.

The ruling by Administrative Law Judge Juliet Cox determined that Tesla had for years engaged in deceptive marketing practices by using the terms “Autopilot” and “Full Self-Driving” to promote the autonomous technology available in many of its cars.

After presiding over five days of hearings held in Oakland, California in July, Cox also recommended suspending Tesla’s license to manufacture cars at its plant in Fremont, California. But California regulators aren’t going to impose that part of the judge’s proposed penalty.

Tesla will have a 90-day window to make changes that more clearly convey the limits of its self-driving technology to avoid having its California sales license suspended. After California regulators filed its action against Tesla in 2023, the Austin, Texas, company already made one significant change by putting in wording that made it clear its Full Self-Driving package still required supervision by a human driver while it’s deployed.

“Tesla can take simple steps to pause this decision and permanently resolve this issue — steps autonomous vehicle companies and other automakers have been able to achieve,” said Steve Gordon, the director of the California Department of Motor Vehicles.

Tesla North America responded to the story on X saying sales would continue uninterrupted.

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.

Sales in California will continue uninterrupted.

— Tesla North America (@tesla_na) December 17, 2025

As mentioned, Tesla already made a change to the name of its Full Self-Driving software in response to California’s case. It now refers to it as Full Self-Driving (Supervised). Tesla also recently removed Autopilot’s steering feature from it’s lower priced Model Y. But California isn’t the only challenge the company is facing.

California’s DMV is not the one questioning the safety of Tesla’s self-driving futures. Federal safety regulators have announced numerous investigations into accidents caused by drivers using the features. In August, a Florida jury found Tesla liable in the 2019 fatal crash of an Autopilot-equipped Model S, and ordered it to pay $329 million to the family of a deceased woman and an injured survivor. Tesla is appealing that verdict.

Meanwhile, Tesla continues to offer its robotaxi service in San Francisco and Austin, Texas. Those rides still include a human in the front seat as a safety monitor. However, just a few days ago, Tesla was spotted testing cars with no driver in Austin.

A driverless Tesla Robotaxi was spotted on the roads of Austin, Texas today.

No one in the car. No safety driver.

Fully autonomous.

This is actually happening.

pic.twitter.com/MSmRaeyJwj

— DogeDesigner (@cb_doge) December 14, 2025

Musk has predicted that the service will start offering driverless rides to customers early next year in Austin. Of course anything can happen between now and then but it certainly appears as if the company is getting very close to that milestone.

Waymo and other competitors are already offering driverless rides in some areas so Tesla won’t be breaking new ground. However, Waymo has to build out each car one at a time with special sensors and that equipment is time consuming and expensive. So at this point Waymo has about 2,000 cars in operation and hopes to double that next year. 

Meanwhile, Tesla has about 1.5 million cars which could be updated to run the latest self-driving software overnight. Plus it has the potential to produce hundreds of thousands of new cars next year. In other words, if Tesla cracks this with its software solution, it can scale it up much, much faster than its competitors and charge less money per ride while doing it.

But in the end it will come down to safety. No one will care if the Waymo costs more if it’s deemed safer.

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