Tesla Sues California DMV Over False Advertising Ruling
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy TSLA?
Source: seekingalpha
- Lawsuit Background: Tesla (TSLA) filed a lawsuit against the California DMV on February 13, seeking to overturn a ruling that labeled the automaker a 'false advertiser,' alleging the DMV wrongfully categorized its marketing practices.
- Investigation and Ruling: The DMV began investigating Tesla's FSD claims in 2021, culminating in a 2025 hearing where a judge ruled that the term 'Full Self-Driving' was unambiguously false, leading to recommendations for license suspensions.
- Compliance and Consequences: Although the DMV's December 2025 ruling required Tesla to cease using 'Autopilot' in marketing, the penalties were ultimately reduced, allowing Tesla time to comply, with the lawsuit coinciding with its pivot towards robotaxis and autonomous driving.
- Market Impact: Tesla's legal action could significantly affect its operations in California, particularly as the company tests automated vehicles in its Robotaxi pilot; a loss in this lawsuit may harm its brand image and market trust.
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Analyst Views on TSLA
Wall Street analysts forecast TSLA stock price to fall
30 Analyst Rating
12 Buy
11 Hold
7 Sell
Hold
Current: 411.820
Low
25.28
Averages
401.93
High
600.00
Current: 411.820
Low
25.28
Averages
401.93
High
600.00
About TSLA
Tesla, Inc. designs, develops, manufactures, sells and leases high-performance fully electric vehicles and energy generation and storage systems, and offers services related to its products. Its segments include automotive, and energy generation and storage. The automotive segment includes the design, development, manufacturing, sales and leasing of high-performance fully electric vehicles, and sales of automotive regulatory credits. It also includes sales of used vehicles, non-warranty maintenance services and collisions, part sales, paid supercharging, insurance services revenue and retail merchandise sales. The energy generation and storage segment include the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives. Its consumer vehicles include the Model 3, Y, S, X and Cybertruck. Its lithium-ion battery energy storage products include Powerwall and Megapack.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Tesla's Cybertruck Price Cut Strategy to Boost Sales
- Price Cut Strategy: Tesla's Cybertruck dual motor all-wheel drive version is currently priced at $59,990, with CEO Elon Musk indicating this promotion lasts only 10 days, aimed at reviving sales that have declined due to the end of federal EV tax credits, although a price increase may follow.
- Significant Sales Decline: Cybertruck sales dropped from 39,965 units in 2024 to 20,237 units in 2025, marking a 48% year-over-year decrease, indicating weak market demand and necessitating a reassessment of production plans to address lower-than-expected demand.
- Production Capacity Adjustments: Musk initially planned for an annual production of 250,000 Cybertrucks, but current demand is less than 10% of that target, and Tesla faces challenges in balancing resources between producing the Optimus Bot humanoid robot and the Cybertruck.
- International Market Expansion: The Cybertruck has recently begun sales in international markets, yet Tesla must closely monitor actual demand growth and consider whether to publicly share sales figures to bolster market confidence.
See More
Investor Warns Tesla Shareholders on Stock-Based Compensation Risks
- Cost of Stock Compensation: Investor Ross Gerber warned Tesla shareholders on social media that stock-based compensation represents a real cost for companies, drawing parallels to Meta Platforms' nearly $23.6 billion spent on share buybacks to offset dilution, indicating shareholders should be aware of this potential risk.
- Dilution Impact Analysis: When employees are offered stock-based compensation, the increase in the number of shares issued can lead to a decrease in the value of existing shares, thus companies often buy back shares to mitigate dilution concerns, which can enhance stock value, a point Tesla shareholders need to heed.
- Tesla's Equity Allocation: Tesla has reserved nearly 60 million shares for employee compensation and 208 million shares for CEO Elon Musk, who owns over 519 million shares, with Tesla having over 3.7 billion outstanding shares in total, highlighting the complexity of the company's equity structure.
- Market Performance Fluctuations: Tesla's stock price fell 2.91% to $399.83 at market close on Monday, then rose slightly by 0.19% to $400.57 during after-hours trading, reflecting the market's sensitivity to stock compensation and its potential implications.
See More
Uber CEO Predicts Future of Robotaxis
- Robotaxi Expansion Plan: Uber CEO Dara Khosrowshahi stated in a podcast that he expects robotaxis to handle most trips on the platform within 15 to 20 years, although he acknowledged that this transition will not happen in the near term.
- Technological and Regulatory Challenges: Khosrowshahi emphasized that scaling autonomous fleets requires regulatory approval, technological advancements, and infrastructure development, noting that “we operate in the physical world, not the virtual world.”
- Intensifying Market Competition: Tesla CEO Elon Musk indicated that Tesla aims to maintain the largest fleet of autonomous vehicles, despite increasing competition with Waymo, with Tesla primarily relying on cameras while Waymo focuses on systems designed to surpass human driving performance.
- Waymo Safety Statement: Waymo informed Congress that its robotaxis are not remotely driven on U.S. roads, asserting that all vehicle operations are controlled by onboard systems, with remote staff providing guidance to ensure safety and address lawmakers' concerns.
See More
Tesla Sues California DMV Over False Advertising Ruling
- Lawsuit Background: Tesla (TSLA) filed a lawsuit against the California DMV on February 13, seeking to overturn a ruling that labeled the automaker a 'false advertiser,' alleging the DMV wrongfully categorized its marketing practices.
- Investigation and Ruling: The DMV began investigating Tesla's FSD claims in 2021, culminating in a 2025 hearing where a judge ruled that the term 'Full Self-Driving' was unambiguously false, leading to recommendations for license suspensions.
- Compliance and Consequences: Although the DMV's December 2025 ruling required Tesla to cease using 'Autopilot' in marketing, the penalties were ultimately reduced, allowing Tesla time to comply, with the lawsuit coinciding with its pivot towards robotaxis and autonomous driving.
- Market Impact: Tesla's legal action could significantly affect its operations in California, particularly as the company tests automated vehicles in its Robotaxi pilot; a loss in this lawsuit may harm its brand image and market trust.
See More
Tesla's Transformation into AI-Driven Services Business
- Optimus Progress: Tesla's Optimus Gen 3 robot has made significant advancements in fine motor skills, capable of tasks such as tearing paper towels, opening cabinets, and folding laundry, showcasing its potential in future service markets.
- Production Scale Plans: Musk aims to produce 1 million Optimus robots annually at the Fremont factory, although it remains in the R&D phase and is currently only tested within Tesla's factories, indicating the company's commitment to future technology.
- Market Valuation Analysis: With a market cap of $1.6 trillion and a forward P/E ratio of 202, Tesla's valuation is debated; some argue its potential for successfully deploying physical AI globally is not fully recognized by the market.
- Investment Risk Assessment: While Optimus could present significant growth opportunities for Tesla, if the product fails or struggles to scale, the stock may face substantial devaluation risks, prompting investors to carefully evaluate the current market hype.
See More
Tesla Transforms Fremont Factory for Optimus Robot Production
- Factory Transformation: Tesla's decision to repurpose its Fremont factory from electric vehicle production to manufacturing Optimus robots underscores the company's commitment to an AI-driven services business, although this shift may impact the production of the S and X models.
- Optimus Potential: The Optimus robot demonstrates impressive capabilities in learning basic tasks, handling delicate objects, and showcasing advanced dexterity, yet it remains in the R&D phase and is currently only tested within Tesla's factories.
- Production Goals: Musk has set a long-term target of producing 1 million Optimus bots annually, although he cautioned investors that actual production may not commence until the end of this year, indicating limited short-term impact on Tesla's stock price.
- Market Valuation: With a market capitalization of $1.6 trillion and a forward P/E ratio of 202, Tesla's high valuation raises concerns for investors, especially given the lack of historical benchmarks for Optimus, which could lead to significant risks in the short term.
See More
Tesla's Cybertruck Price Cut Strategy to Boost Sales
- Price Cut Strategy: Tesla's Cybertruck dual motor all-wheel drive version is currently priced at $59,990, with CEO Elon Musk indicating this promotion lasts only 10 days, aimed at reviving sales that have declined due to the end of federal EV tax credits, although a price increase may follow.
- Significant Sales Decline: Cybertruck sales dropped from 39,965 units in 2024 to 20,237 units in 2025, marking a 48% year-over-year decrease, indicating weak market demand and necessitating a reassessment of production plans to address lower-than-expected demand.
- Production Capacity Adjustments: Musk initially planned for an annual production of 250,000 Cybertrucks, but current demand is less than 10% of that target, and Tesla faces challenges in balancing resources between producing the Optimus Bot humanoid robot and the Cybertruck.
- International Market Expansion: The Cybertruck has recently begun sales in international markets, yet Tesla must closely monitor actual demand growth and consider whether to publicly share sales figures to bolster market confidence.
See More
Investor Warns Tesla Shareholders on Stock-Based Compensation Risks
- Cost of Stock Compensation: Investor Ross Gerber warned Tesla shareholders on social media that stock-based compensation represents a real cost for companies, drawing parallels to Meta Platforms' nearly $23.6 billion spent on share buybacks to offset dilution, indicating shareholders should be aware of this potential risk.
- Dilution Impact Analysis: When employees are offered stock-based compensation, the increase in the number of shares issued can lead to a decrease in the value of existing shares, thus companies often buy back shares to mitigate dilution concerns, which can enhance stock value, a point Tesla shareholders need to heed.
- Tesla's Equity Allocation: Tesla has reserved nearly 60 million shares for employee compensation and 208 million shares for CEO Elon Musk, who owns over 519 million shares, with Tesla having over 3.7 billion outstanding shares in total, highlighting the complexity of the company's equity structure.
- Market Performance Fluctuations: Tesla's stock price fell 2.91% to $399.83 at market close on Monday, then rose slightly by 0.19% to $400.57 during after-hours trading, reflecting the market's sensitivity to stock compensation and its potential implications.
See More
Uber CEO Predicts Future of Robotaxis
- Robotaxi Expansion Plan: Uber CEO Dara Khosrowshahi stated in a podcast that he expects robotaxis to handle most trips on the platform within 15 to 20 years, although he acknowledged that this transition will not happen in the near term.
- Technological and Regulatory Challenges: Khosrowshahi emphasized that scaling autonomous fleets requires regulatory approval, technological advancements, and infrastructure development, noting that “we operate in the physical world, not the virtual world.”
- Intensifying Market Competition: Tesla CEO Elon Musk indicated that Tesla aims to maintain the largest fleet of autonomous vehicles, despite increasing competition with Waymo, with Tesla primarily relying on cameras while Waymo focuses on systems designed to surpass human driving performance.
- Waymo Safety Statement: Waymo informed Congress that its robotaxis are not remotely driven on U.S. roads, asserting that all vehicle operations are controlled by onboard systems, with remote staff providing guidance to ensure safety and address lawmakers' concerns.
See More
Tesla Sues California DMV Over False Advertising Ruling
- Lawsuit Background: Tesla (TSLA) filed a lawsuit against the California DMV on February 13, seeking to overturn a ruling that labeled the automaker a 'false advertiser,' alleging the DMV wrongfully categorized its marketing practices.
- Investigation and Ruling: The DMV began investigating Tesla's FSD claims in 2021, culminating in a 2025 hearing where a judge ruled that the term 'Full Self-Driving' was unambiguously false, leading to recommendations for license suspensions.
- Compliance and Consequences: Although the DMV's December 2025 ruling required Tesla to cease using 'Autopilot' in marketing, the penalties were ultimately reduced, allowing Tesla time to comply, with the lawsuit coinciding with its pivot towards robotaxis and autonomous driving.
- Market Impact: Tesla's legal action could significantly affect its operations in California, particularly as the company tests automated vehicles in its Robotaxi pilot; a loss in this lawsuit may harm its brand image and market trust.
See More
Tesla's Transformation into AI-Driven Services Business
- Optimus Progress: Tesla's Optimus Gen 3 robot has made significant advancements in fine motor skills, capable of tasks such as tearing paper towels, opening cabinets, and folding laundry, showcasing its potential in future service markets.
- Production Scale Plans: Musk aims to produce 1 million Optimus robots annually at the Fremont factory, although it remains in the R&D phase and is currently only tested within Tesla's factories, indicating the company's commitment to future technology.
- Market Valuation Analysis: With a market cap of $1.6 trillion and a forward P/E ratio of 202, Tesla's valuation is debated; some argue its potential for successfully deploying physical AI globally is not fully recognized by the market.
- Investment Risk Assessment: While Optimus could present significant growth opportunities for Tesla, if the product fails or struggles to scale, the stock may face substantial devaluation risks, prompting investors to carefully evaluate the current market hype.
See More
Tesla Transforms Fremont Factory for Optimus Robot Production
- Factory Transformation: Tesla's decision to repurpose its Fremont factory from electric vehicle production to manufacturing Optimus robots underscores the company's commitment to an AI-driven services business, although this shift may impact the production of the S and X models.
- Optimus Potential: The Optimus robot demonstrates impressive capabilities in learning basic tasks, handling delicate objects, and showcasing advanced dexterity, yet it remains in the R&D phase and is currently only tested within Tesla's factories.
- Production Goals: Musk has set a long-term target of producing 1 million Optimus bots annually, although he cautioned investors that actual production may not commence until the end of this year, indicating limited short-term impact on Tesla's stock price.
- Market Valuation: With a market capitalization of $1.6 trillion and a forward P/E ratio of 202, Tesla's high valuation raises concerns for investors, especially given the lack of historical benchmarks for Optimus, which could lead to significant risks in the short term.
See More
