Tesla shares plunged 4.62% as California DMV threatens 30-day sales ban over autonomous driving branding.

Tesla shares plunged 4.6175% in pre-market trading on Dec. 18, 2025, as renewed regulatory scrutiny over its autonomous driving branding intensified investor concerns. The selloff followed California’s Department of Motor Vehicles (DMV) announcement that it could enforce a 30-day sales ban on Tesla vehicles due to alleged misuse of terms like “Autopilot” and “Full Self-Driving.”

The DMV has long disputed Tesla’s marketing of these features, arguing they mislead consumers by implying greater autonomy than the systems deliver. Despite prior negotiations since 2023, no resolution has been reached. The agency now faces off with Tesla over whether the company must reclassify its driver-assistance technology to align with state advertising standards. This regulatory standoff has cast doubt on Tesla’s ability to maintain its aggressive growth trajectory, particularly in California—a key market and manufacturing hub.

Tesla has defended its branding, asserting no customer complaints have been reported and emphasizing its progress in autonomous vehicle testing. However, federal and state regulators have repeatedly scrutinized the safety and accuracy of its self-driving claims, including a $329 million jury verdict against the company in a 2019 Autopilot-related fatality. The latest action by California underscores persistent regulatory challenges that could pressure investor sentiment amid Tesla’s broader ambitions in AI and robotaxi development.

Investor sentiment toward Tesla has remained volatile over the past year as regulatory pressures, production delays, and competition in the EV market have intensified. The company’s stock has faced both sharp declines and short-term rebounds amid conflicting narratives around its technological innovations and operational performance.

Despite these headwinds, Tesla’s market capitalization remains among the largest in the automotive sector. Analysts continue to debate whether the company’s long-term vision and technological leadership will offset regulatory risks and production challenges. Meanwhile, regulatory bodies in the U.S. and Europe are expected to introduce new standards for autonomous driving in 2026, which could affect the entire industry.