Tesla could be suspended from selling vehicles in California for 30 days due to misleading marketing concerning its Autopilot system, Bloomberg reported on Tuesday.
According to a document filed by the State of California, the company is not allowed to use the ‘Autopilot’ term to describe features below Level 3 (L3) of autonomy, on the scale defined by the Society of Automotive Engineers (SAE).
Reacting to the news, Goldman Sachs analyst Mark Delaney wrote in a new research note — obtained by PriceTarget — that the firm does not expect Tesla to be affected by the ruling.
“Our initial view is that we would not expect a disruption to Tesla‘s business in California,” Delaney stated.
The document gives the company 90 days to comply with the regulation.
Later on Tuesday, Tesla responded to the report on X, stating that the decision did not reflect the perspective of its customers.
“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,” the company wrote, adding that “sales in California will continue uninterrupted.”
L2 x L3
According to the filing, “Tesla would need to stop using the name Autopilot to describe features that are not L3 or higher, or enhance the Autopilot capabilities to reach an L3 or higher threshold,” Delaney noted.
Level 3 autonomy corresponds to Conditional Driving Automation and is in the middle of a scale that goes from 0 to 5.
Currently, Tesla‘s Autopilot is ranked between L1 (Driver Assistance) and L2 (Partial Driver Assistance).
Its more advanced Full Self-Driving (Supervised) software is somewhere between L2 and L3, as it transitions towards full autonomy.
Goldman Sachs estimates that up to 10% of global new car sales could be Level 3 vehicles by 2030.
ADAS Name Change in China
Additionally, the ruling does not pose a threat to sales as “Tesla has changed and used alternative names when marketing ADAS [advanced driver-assistance systems] features in the past,” the analyst noted.
In April, and after concerns regarding false advertising of software capabilities in China, the Ministry of Industry and Information Technology (MIIT) banned terms like ‘autonomous driving’ or ‘full self-driving.’
Tesla, which had introduced FSD in China just a month before, changed its denomination to ‘Intelligent Assisted Driving’ (“智能辅助驾驶”).
No Safety Operators in Austin Robotaxi
Goldman Sachs reiterated on Tuesday its Neutral rating and $400 price target on Tesla after CEO Elon Musk confirmed that the company had begun testing robotaxi rides in Austin without a safety operator inside the vehicle.
The milestone demonstrates that the Elon Musk-led brand is “is making progress with its autonomous technology,” Delaney wrote.
Stock All-Time High
As Goldman Sachs reaffirms its $400 price target on Tesla, the share price has jumped to a new record on Tuesday.
The target implies an 18.3% downside on the stock price, based on its closing at $489.88 in the last trading session — about $1.00 above the previous all-time high, reached a year ago.
Shares reached a high of $491.50 on Tuesday. Year to date, Tesla‘s stock has jumped 21.3%.
