By Abhirup Roy and Chris Kirkham
SAN FRANCISCO, Dec 16 (Reuters) – A California regulator has put on hold an order to suspend Tesla sales in the state, the latest development in a case in which it accused the electric vehicle maker of falsely marketing and overstating self-driving capabilities.
The decision grants a reprieve to Tesla in a case that could force it to halt sales in its biggest U.S. market.
The Department of Motor Vehicles (DMV) ordered the suspension of Tesla’s manufacturing and sales licenses for 30 days, adopting a judge’s proposals, but immediately put them on hold, DMV director Steve Gordon told reporters on Tuesday.
The DMV had accused Tesla of misleading consumers by using brand names Autopilot and Full Self-Driving (FSD) for their vehicles’ advanced driver assistance features. The regulator had told Judge Juliet Cox of the state Office of Administrative Hearings that the names falsely implied the cars operate autonomously.
But Gordon said on Tuesday the DMV wants to give Tesla “one more chance to be able to remedy the situation,” adding that he hoped Tesla will “find a way to get these misleading statements corrected.”
The DMV said it stayed the suspension of Tesla’s ability to sell vehicles for 90 days and stayed its manufacturing license indefinitely.
Tesla did not immediately respond to a Reuters request for comment.
A lawyer for Tesla previously said the company had “clearly and consistently” explained that its vehicles purchased with Autopilot and FSD software require driver supervision and are not autonomous. “Tesla has never misled consumers. Never. And not even close,” the lawyer said in a hearing.
DMV’s Gordon said Tesla can pursue an appeal with the agency or potentially in court.
The order is a potential setback for Tesla and its marketing of autonomous vehicles, but the stay is a relief.
The Elon Musk-led company, like its EV rivals, is battling a plunge in demand following the expiry of key tax credits that have been a major driver of sales.
Musk has pivoted the company’s focus to robotaxis, underpinned by a version of its self-driving software, as well as humanoid robots, and much of Tesla’s valuation hangs on those bets.
While Autopilot helps Tesla vehicles to accelerate, brake and stay in their lanes on highways, Full Self-Driving allows vehicles to change lanes, obey traffic signals and drive on city streets.
Tesla has added the term “Supervised” for FSD in passenger vehicles. It uses an “Unsupervised” version of the software for moving cars from the assembly lines to delivery lots at some of its factories. Tesla also uses the software to run a robotaxi service in Austin with human safety monitors in front passenger seats and remote support.
(Reporting by Abhirup Roy in San Francisco and Chris Kirkham in Los Angeles; Additional reporting by Juby Babu in Mexico City and Mike Scarcella in Washington D.C.; Editing by David Gregorio and Christopher Cushing)
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