Here's a regulatory twist that's getting the analyst community fired up: A California court has ruled that Tesla Inc. (TSLA) must overhaul its Full Self-Driving marketing claims or face a 30-day suspension of its license to sell vehicles in the state. The Elon Musk-led electric vehicle maker has 90 days to comply with the order, which stems from a lawsuit alleging the FSD technology's name is misleading.
The ruling has divided prominent Tesla watchers, with two well-known analysts offering starkly different takes on what it means for the company.
Gerber: The Jig Is Up
Ross Gerber, co-founder of investment firm Gerber Kawasaki, didn't mince words in his reaction on X Wednesday. "The days of Tesla calling something full self driving that doesn't fully drive itself are over in California," he wrote.
It's a characteristically blunt assessment from Gerber, who has been a vocal critic of the technology's branding. That said, his position isn't purely adversarial. He's acknowledged the improvements Tesla has made with the v14 update of the software, and despite maintaining a bearish stance on TSLA stock, Gerber has confirmed he still holds a Tesla position. It's complicated, in other words.
Munster: This Is Ridiculous
On the other side of the debate sits Gene Munster of Deepwater Asset Management, who finds the entire ruling "absurd." His argument? The warnings are right there in your face.
"When you turn on Autopilot or FSD you get a message, 'Keep your eyes on the road. Be attentive at all times,'" Munster pointed out on X. He noted that previous versions of the software went even further, requiring drivers to keep their hands on the steering wheel at all times.
Munster's solution, offered with what seems like barely contained exasperation: "I bet Elon [Musk] renames it to 'California Driver Must Remain Fully Attentive and In Control At All Times Cruise Control.'" Point taken.
For context, Munster has been bullish on Tesla's autonomous driving ambitions. He previously predicted that Tesla would expand driverless Robotaxi operations to multiple cities in 2026. The company is currently testing driverless Robotaxis in Austin, keeping pace with CEO Musk's end-of-year timeline for the pilot program.
Meanwhile, the Stock Keeps Climbing
Despite the regulatory headwinds, Tesla's valuation continues to defy gravity. The automaker recently pushed its market capitalization past $1.58 trillion, cementing its position as the planet's most valuable car company by a comfortable margin. That puts it well ahead of legacy rivals like Toyota Motor Corp. (TM) and Chinese competitors including BYD Co. Ltd. (BYDDY) (BYDDF) and Xiaomi Corp. (XIACF) (XIACY).
According to market data, Tesla scores strongly on momentum and quality metrics while offering satisfactory growth characteristics. The value proposition is less compelling, but the stock has demonstrated favorable price trends across short, medium, and long-term timeframes.
Price Action: TSLA shares declined 4.62% to close at $467.26 on Wednesday. The stock recovered slightly in after-hours trading, gaining 0.46% to $469.40.
The broader question here is whether a name change would actually address the court's concerns, or if this is about something deeper regarding how autonomous driving technology should be marketed to consumers. Tesla maintains that its warning messages are clear and prominent, but California regulators apparently think the "Full Self-Driving" branding creates expectations that the technology can't yet deliver. With 90 days on the clock, we'll see how Musk and company respond.
