Tesla sues to overturn its own FSD false advertising ruling

Tesla has filed a lawsuit against the California Department of Motor Vehicles seeking to reverse the administrative ruling that found the automaker engaged in false advertising with its “Autopilot” and “Full Self-Driving” marketing.

The move comes just days after Tesla complied with the DMV’s demands to clean up its marketing language — raising the question of why the company is fighting a ruling it already capitulated to.

The lawsuit

In a complaint dated February 13, Tesla’s attorneys alleged that the DMV “wrongfully and baselessly” labeled the automaker a “false advertiser” for its prior use of the terms Autopilot and Full Self-Driving. Tesla argues that the DMV never proved consumers were actually confused about whether its cars were safe to drive without a human at the wheel.

Tesla also made a remarkable argument: that the DMV had known about its use of “Autopilot” branding since 2014 and “Full Self-Driving” since 2016, essentially claiming a statute of limitations on misleading the public. This is the same argument Tesla tried in 2023, the idea that it had been lying for so long that it should be allowed to keep going.

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Background: How we got here

This lawsuit is the latest chapter in a years-long saga between Tesla and the California DMV. The agency first launched its investigation in 2021 after growing concerns that Tesla was misrepresenting the capabilities of its driver-assistance systems.

After a five-day hearing in 2025, an administrative law judge sided with the DMV. The December 2025 ruling found that Tesla’s use of “Autopilot” follows what the court called “a long but unlawful tradition” of using ambiguity to mislead consumers. On “Full Self-Driving,” the court was even harsher, ruling that the name is “actually, unambiguously false and counterfactual.”

The DMV gave Tesla 60 days to fix its marketing or face a 30-day suspension of its dealer and manufacturer licenses, which would have temporarily halted Tesla’s ability to sell or build cars in the state.

Tesla complied — then sued

Here is where things get contradictory. By February 17, the DMV confirmed that Tesla had taken appropriate corrective action and no license suspension would be necessary.

Tesla killed Autopilot as a standalone product in the U.S. and Canada in January, added the “(Supervised)” qualifier to “Full Self-Driving,” and moved FSD to a subscription-only model at $99 per month, eliminating the $8,000 one-time purchase option.

The compliance deadline of February 14 conveniently coincided with Tesla’s decision to end direct FSD sales — a move that also happened to detach the company from its long-standing promise that vehicles purchased with FSD would eventually receive unsupervised self-driving capability.

Now, despite complying with every DMV demand, Tesla wants the “false advertiser” label removed from its record. The company is banking its entire future on robotaxis and autonomous driving, and a formal finding that it lied about “Full Self-Driving” for nearly a decade is not exactly helpful for that narrative.

Mounting legal pressure

This lawsuit does not exist in a vacuum. Tesla is facing an avalanche of legal consequences tied to its autonomous driving claims. Just last week, a federal judge upheld the historic $243 million verdict against Tesla in a fatal Autopilot crash case, the first major plaintiff victory in an Autopilot wrongful death suit. Tesla had rejected a $60 million settlement offer before that trial. Since that August 2025 verdict, Tesla has quietly settled at least four additional Autopilot crash lawsuits rather than risk more jury decisions.

The cash amounts of those settlements are still unknown.

Meanwhile, NHTSA launched a broad investigation in October 2025 into 2.88 million Tesla vehicles after connecting 58 incidents to FSD, including 14 crashes and 23 injuries. The investigation specifically focuses on FSD running red lights and driving into opposing lanes of traffic.

Electrek’s Take

The audacity of this lawsuit is remarkable. Tesla spent nearly a decade selling driver-assistance software under the name “Full Self-Driving” despite that software never making any Tesla capable of driving itself.

A court reviewed the evidence and concluded Tesla’s marketing was “unambiguously false and counterfactual.” Tesla then complied with every corrective measure the DMV required, and is now suing to pretend none of it happened.

The motivation is transparent. Tesla told investors it has 1.1 million “FSD subscribers” and its entire valuation thesis rests on becoming a robotaxi company. A formal, on-the-record finding that the company engaged in false advertising about self-driving directly undermines that pitch. It also creates serious liability exposure in the growing pile of Autopilot crash lawsuits.

But suing to erase a ruling you already complied with does not change the underlying facts. The court found the advertising was false. Tesla changed its marketing because the advertising was false. Removing the label does not remove the decade of misleading customers, and the $243 million verdict that just survived Tesla’s challenge suggests juries agree.

As for the argument that drivers were not misled, that very jury verdict says otherwise.

Furthermore, Tesla’s own poor defense in the DMV case also confirmed it. Tesla hired a polling expert to present its case and its own poll, designed to make Tesla look as good as possible, confirmed that roughly a third of buyers were at least partly confused by the capabilities of the systems based on their names.

Tesla wants everything. It wants to be able to advertise its driver assistance systems as autonomous while having them regulated as driver assistance systems.