NEW YORK, Feb 24, 2026, 10:02 (EST) — Regular session
Highlights:
- Tesla shares edged lower in morning trading after fresh reports detailed a new legal fight over California’s ruling on driver-assistance marketing.
- Following accusations from the state, Tesla altered language in California, sidestepping a license suspension.
- Regulatory risk is in the mix for traders, as the broader tape stays uneven.
Tesla stock slipped 0.6% to $397.57 on Tuesday. The move followed reports that the company is suing California’s Department of Motor Vehicles, aiming to reverse a decision accusing its “Autopilot” and “Full Self-Driving” (FSD) branding of misleading customers. According to court documents cited in the report, both features are described as Level 2 driver assistance, which means the driver still needs to remain attentive. (Barron’s)
The legal battle throws Tesla’s driver-assist marketing into the spotlight again, only days after California confirmed the automaker moved to retain its dealer and manufacturer licenses. DMV Director Steve Gordon said the agency stays “committed to safety” and was glad to see Tesla’s adjustments. (California DMV)
Tesla’s pitch to investors has long leaned on software and automation, even as parts of the EV market lose steam. If regulators clamp down on how it promotes driver-assistance tech, that’s a threat not just to subscription revenue, but also to the story Tesla sells about future growth.
The stock closed Monday at $399.83, down 2.9%. That drop tracked the broader retreat among risk assets.
Auto stocks slipped last session—Ford dropped 2.6%, General Motors lost 2.3%. The declines highlight that when sentiment turns, Tesla isn’t the only one feeling the pressure. (MarketWatch)
As U.S. markets opened, fresh macro data hit the tape. The Conference Board’s Consumer Confidence Index moved up to 91.2 in February after an upward revision put January at 89.0. (PR Newswire)
It’s been a choppy ride. Reuters pointed to fresh jitters over AI disruption and the murky outlook for U.S. tariffs, all while Nvidia’s earnings are set for Wednesday. (Reuters)
The Tesla legal fight isn’t a simple, overnight trigger. A win for the DMV would leave Tesla navigating stricter wording in California—and the automaker could find itself under the microscope for how it markets and explains those driver-assist systems.
Investors are awaiting the next filing in the California case, also looking for any word from regulators. Eyes are on Nvidia’s results out Wednesday, a key test for risk appetite in high-valuation stocks.
