I couldn't tell you how many times someone has come up to me and asked me if my Tesla Model 3 can "drive itself." It's usually one of the first questions, right up there with "How far can you drive on a charge?" and "How 'bout that Elon, huh?"
No commercially available car today is capable of true self-driving. Yet Tesla's claims around its Autopilot and Full Self-Driving software have caused regulators to take Tesla to court in California, and now the automaker could have its dealer license suspended or revoked if it is found to have misled consumers with "untrue" advertising claims regarding its driver assistance features.
Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Also on deck: we look at the impact of tariffs on General Motors' first half of 2025, and how China could start cracking down on its zero-mile "used" cars. Let's jump in.
30%: California Is Coming For Tesla's License To Sell Cars Over 'Misleading' Autopilot, FSD Advertising
California regulators have once again claimed that Tesla misled consumers about the capabilities of its Autopilot and Full Self-Driving software. We've heard this one argued in courts before, and typically, Tesla comes away victorious. However, it's back on the docket in California, and this time, it's more than just a slap on the wrist at stake.
A five-day trial kicked off on Monday in Oakland, where regulators have threatened to suspend or even revoke Tesla's license to sell cars in the state over claims that it allegedly marketed its Autopilot and FSD driver assistance features inappropriately.
The argument is simple: the California Department of Motor Vehicles says that Tesla's marketing made both software stacks sound like the car would let you prop your feet up and take a nap while the vehicle drove you to your destination. T
esla says it did no such thing and clearly explained the limitations to consumers in the fine print (and the manual). Plus, Tesla says that its marketing—the corporation's claims to its consumers—is protected under the First Amendment of the U.S. Constitution.
Automotive News explains:
The California regulator says Tesla violated state law by making “untrue or misleading” statements in 2021 and 2022 while advertising its vehicles with advanced driver-assistance systems, including describing the features as being “able to conduct short and long-distance trips with no action required in the driver’s seat.”
An amended complaint by the DMV filed in November 2023 said Tesla vehicles equipped with driver-assist technology “could not at the time of those advertisements, and cannot now, operate as autonomous vehicles.”
Tesla has argued in filings that the company’s remarks in dispute are protected free speech under the First Amendment of the Constitution. Lawyers for the company also say the marketing statements cited by the DMV have been taken out of context and that [the] regulator is failing to consider Tesla’s warnings and disclosures about the systems.
The problem for Tesla is that its tech, both Autopilot and FSD, are Level 2 driver assistance systems. Tesla even admitted to the California DMV in 2021 that even its final release of Autosteer for City Streets would remain a Level 2 system. And claims made between 2021 and 2022 are the DMV's key argument.
To this day, the tech still isn't there yet. No private Tesla owner has a car capable of completely driving autonomously, and millions of cars equipped with Tesla's Hardware 3 suite may not even have the computing capability to run a fully automated driving stack (despite the brand promising consumers that cars have had the hardware since 2016).
If the courts find that Tesla did mislead consumers, the company could be in some trouble. The DMV is out for blood and is seeking to suspend or revoke the automaker's dealer license for up to 30 days. That means the single state responsible for a third of the brand's U.S. demand could go dark for an entire month in a time when sales are already hurting over political issues caused by the company's CEO.
60%: General Motors Books A $1.1 Billion Tariff Impact
Even an American automaker that builds a lot of cars stateside isn't immune to the wave of tariffs sweeping the U.S. manufacturing landscape. While it had a lot of good news on today's second-quarter earnings call, including improvements around EV profitability, General Motors also booked a $1.1 billion tariff hit. Ouch.
The automaker says it's working as quickly as it can to restore U.S. carmaking jobs, but that won't happen overnight. More here from CNBC:
Amid the trade uncertainty, GM is trying to counter tariff risks. Last month, the company announced it will invest $4 billion in several American plants, including moving or increasing production of two Mexican-produced vehicles to U.S. plants. The company also said last week it will move production of a gas-powered SUV and add manufacturing of pickup trucks to its home state of Michigan.
The company’s full-year guidance, which it modified in May due to tariffs, includes adjusted EBIT of between $10 billion and $12.5 billion, down from its January guidance, which did not take tariffs into account, of $13.7 billion to $15.7 billion.
GM’s yearly outlook also includes net income attributable to stockholders of $8.25 billion to $10 billion, down from $11.2 billion to $12.5 billion earlier this year, and adjusted automotive free cash flow between $7.5 billion and $10 billion, down from between $11 billion and $13 billion prior to the tariffs.
Meanwhile, GM hangs onto its no. 2 EV seller title, right behind Tesla. More on this later today.
90%: China Might Finally Start Cracking Down On Zero-Mile Used Cars
You know that the EV industry is really cooking when the phrase "zero-mile used car" is getting thrown around. No, that's not a typo—it's a very real strategy that automakers are using to sell EVs in China, and it's not exactly on the up-and-up either. And now, China might finally be looking for a way to crack down on them.
In an article published by Reuters, it was revealed that China's Ministry of Industry and Information Technology (MIIT) is looking for a way to approach the problem by "[regulating] the zero-mileage used cars together with relevant departments and managing the issue from its source."
It's a practice that allows automakers to label a new car as a used one, registering it right away to record a sale and then funneling it to a used car dealer to lower the price for end consumers.
These zero-mile "used" cars have started to pop up in larger numbers over the last year as pressure on dealerships and automakers has mounted. Local governments have pushed both to prop up sales numbers by offering significant incentives and even supporting gray-market export schemes.
Here's an excerpt from previous Reuters coverage that outlines how local governments contributed to the process:
Local governments have embraced the practice as vital to meeting ambitious targets for economic growth set by Beijing, according to a Reuters review of local policy documents and state media articles.
Reuters has identified 20 local governments in China—including major export hubs like Guangdong and Sichuan—that have described their support for the export of zero-mileage used cars in publicly available government documents.
The tactics include creating extra licenses for the export of zero-mileage used cars, fast-tracking tax rebate claims, investing in export infrastructure, and funding networking events to encourage zero-mileage used-car exports, the government documents showed.
Originally, Auto Review—that's the official publication of the China Association of Automobile Manufacturers—said that MIIT was considering banning the resale of vehicles within six months of their initial regulation. That move would essentially kneecap the entire zero-mile used EV industry and undo all of the support from local governments that were supporting the export. However, Auto Review walked back that claim on Monday as "inaccurate."
The plan is apparently no longer to ban the sales, but instead to somehow regulate the industry "from its source." Those specifics have yet to be revealed, but one takeaway is that Auto Review believes that automakers will play some part in this enforcement. Specifically, it was noted that automakers like BYD and Chery were planning to hold their dealers accountable for violations. So it's probably fair to say that the automakers know that the jig is up.
China's EV market is the largest in the entire world and it seems like these "used" EVs were certainly contributing to the number sold at home. Next year could see a pretty big bloodbath for EV adoption in China between the increased competition, price war and a potential lack of sales meant for export as used cars.
100%: Would You Like To See More EV-Themed Attractions Like Tesla's Retro Diner?
Yesterday, I wrote about Tesla's new retro-themed diner. Honestly, it's a pretty sweet niche—charge and get a bite to eat while watching a movie or taking in the sights. Now, sure, it might seem gimmicky, but aren't we doing the same thing with gas stations right now? For example, there's a cult following of Buc-ee's, and a proselytizing of Sheetz fans (guilty) to convert to Wawa.
We already know that EV charging spots are a cash cow for nearby stores. Now add the convenience of a restaurant or attraction coupled into the charging experience, and you've got a recipe for success courtesy of a DC fast charger.
Would you like to see more of these themed charging spots? And if so, what would really speak to you? Let me know in the comments.
