At stake is not only Ilon Musk’s reputation, but also Tesla’s right to operate in its largest market in the U.S. without humiliating restrictions, notes Britain’s The Guardian.
The essence of the conflict: autopilot and safety
The long-running dispute between Tesla and California regulators has reached a climax. The essence of the DMV claims, filed back in 2022 and enriched with new facts by the beginning of 2026, is “deceptive marketing”. The regulator claims that the names “Autopilot” and “Full Self-Driving” (FSD) mislead consumers into believing that the vehicle is fully autonomous.
Tesla, in turn, accuses the DMV of violating the First Amendment to the U.S. Constitution (free speech) and overstepping its authority. Musk’s lawyers argue that the regulator ignored the names for years, actually approving their use, and “woke up” only under political pressure.
Figures and arguments of the parties
Tesla’s statement of claim (Case No. 26CV08942) cites the following figures:
Safety: Tesla claims mileage per accident with FSD enabled in 2025 was 11.2 million miles, 7 times that of a typical driver.
Economics: If Tesla loses, it faces revocation of its license to sell cars in California, a state that accounts for more than 18% of the company’s global deliveries.
Quote from the lawsuit: “The DMV is attempting to retroactively criminalize common terminology that has become an industry standard. This is not consumer protection, but technological Luddism in a legal wrapper.”
The regulator parries with statistics: according to the DMV, there were 482 incidents in the last year where drivers “over-relied” on the system, 12 of which ended fatally. The state’s main argument: “Autonomy is a technical feature, not a marketing slogan.”
Jurisdictional battle
As of February 26, 2026, the court has moved on to the motions phase. Tesla is seeking dismissal of the DMV’s complaint on the grounds that the federal agency NHTSA already oversees safety and the state has no right to duplicate those functions, creating “legal chaos.”
The judge set a hearing on the merits for April 2026. If Tesla loses, the company will not only have to rebrand its entire line of software, but also pay fines that Goldman Sachs analysts estimate could reach $1.5 billion including class action lawsuits from owners.
What does this mean for the market?
For investors, the trial is a marker of the viability of the “robotaxi” concept. Musk has repeatedly stated that Tesla’s value without autonomy is “close to zero.”
A victory in court would cement the company’s status as an untouchable technology leader. A loss would force the market to reassess Tesla’s stock, which is trading near all-time highs today.
